Payment Data Systems, Inc. Announces the Carmen Electra Prepaid MasterCard(R) and the Carmen Electra Gift MasterCard(R)

Payment Data Systems, Inc. (OTCBB: PYDS), an integrated electronic payments solutions provider, announced the Carmen Electra Prepaid MasterCard® and the Carmen Electra Gift MasterCard® are anticipated to be available for purchase on Monday July 17, 2006.

The Carmen Electra Prepaid MasterCard and Carmen Electra Gift MasterCard cards are the first series in the company's celebrity prepaid card portfolio. Louis Hoch, President and COO of Payment Data Systems, Inc. said, "We are excited to partner with such a talented personality as Ms. Electra to offer this exciting card program. The Carmen Electra Prepaid MasterCard and Carmen Electra Gift MasterCard cards are unlike any others because of their extremely competitive pricing, exclusive Carmen Electra content and continuously evolving features and benefits."

The Carmen Electra Prepaid MasterCard and the Carmen Electra Gift MasterCard are issued by MetaBank pursuant to a license by MasterCard International.

The Carmen Electra Prepaid MasterCard and the Carmen Electra Gift MasterCard are marketed and administered by Payment Data Systems, Inc. For updates, please see http://www.carmencard.com.

About Payment Data Systems, Inc.

Payment Data Systems is an integrated payment solutions provider to merchants and billers. The organization provides an extensive set of products to deliver world-class payment acceptance. Payment Data has solutions for merchants, billers, banks, service bureaus and card issuers. The strength of the company is its ability to offer specifically tailored solutions for card issuance, payment acceptance and bill payments.

Payment Data is the owner of the electronic bill payment portal, http://www.billx.com, which has the ability to transmit payments to thousands of national billers.

Payment Data Systems, Inc. (OTCBB: PYDS) is a registered ISO/MSP of MetaBank.

Payment Data's intellectual property includes U.S. Patent Number 7,021,530 that relates to bill payments made with debit and stored value cards.

For additional information, visit www.paymentdata.com. Contact Michael Long for Investor Relations information at 210.249.4040 or email at ir@paymentdata.com.

About MetaBank

MetaBank is a federally chartered savings bank headquartered in Storm Lake, Iowa. Meta Financial Group, Inc.® is the bank holding company for MetaBank, MetaBank West Central, Meta Payment Systems®, and Meta Trust Company®. The Meta Payment Systems division of MetaBank based in Sioux Falls, South Dakota, serves banks, processors, and third party marketers by providing prepaid cards, credit cards, ACH origination, merchant acquiring, ATM sponsorship, and money transfer. For more information call 605.275.8052 or visit http://www.metacash.com.

FORWARD-LOOKING STATEMENTS DISCLAIMER

Except for the historical information contained herein, the matters discussed in this release include certain forward-looking statements, which are intended to be covered by safe harbors. Those statements include, but may not be limited to, all statements regarding our and management's intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, the factors detailed from time to time in our filings with the Securities and Exchange Commission. One or more of these factors have affected, and in the future could affect our businesses and financial results in the future and could cause actual results to differ materially from plans and projections. We believe that the assumptions underlying the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to our management. We assume no obligation to update any forward-looking statements, except as required by law.

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