Dow Jones 10585.12 -5.10 1:19 pm PST, December 2, 2004  NASDAQ 2143.57 +5.34 For info, visit access.smallcapnetwork.com S & P 500 1190.33 -1.04 Change your subscription status here Russell 2000 642.65 -1.03 VOLUME 04: ISSUE 97  Feature: Payment Data - Taking on the Big Boys. If the true measure of a smallcap's growth is evidenced by the company(ies) it keeps, then electronics payment solution provider Payment Data Systems (OTCBB: PYDS) appears well on it's way to realizing significant success.  Today's announcement (release below) of a multi-year deal with Yodlee not only brings the potential for $11 million in revenue over the next three years, it also exposes PYDS's technology to Yodlee's blue ribbon client list which includes--among 150 others-- AOL, JP Morgan, Wachovia, Yahoo, Merrill Lynch and MSN. Payment Data has been selected by Yodlee to facilitate account-to-account funds transfer within its product offerings. The enhanced system will allow customers to open an account at a financial services provider with the ability to transfer funds from an internal or external account. Obviously, this will allow Yodlee's customers more convenience and product flexibility as well as the ability to lower costs while building and fortifying the all-important mantra of client retention. Volumes, while sporadic, have recently perked up on PYDS and we reiterate our call in our recent Trading Alert that accumulation at this level is warranted for risk-oriented investors. With the shares at roughly 30 cents, we look for a possible run to 33 cents and, once breached, we feel that a new up-leg should appear. The shares outstanding are relatively small at 22.4 million, so watch for gapping. Given the fact that the market cap is currently only $6.27 million, the simple math of contracts gained versus the share value imbue the shares with very compelling potential at this level. Small...for now. Today's announcement further evidences the diverse abilities and product mix of Payment Data's solutions. For a potential future view of the company's fortunes, investors might want to have a gander at a couple of peers such as Bottomline Tech (NASDAQ: EPAY) and MoneyGram (NYSE: MGI). For it's part, MGI provides global payment services and has grown into a company with a market cap of nearly $2 billion.  Bottomline, which we profiled November 23rd, provides software and solutions to automate and manage transaction- based processes for clients. It market caps at just over $200 million. Put these two companies together and you have a picture of the type of diversity that Payment Data can offer to its customers. There's some more info and links regarding MoneyGram in my latest piece on the SCBlog. The strength of Payment Data is that customers, to date, have tended to use multiple providers to facilitate their payment needs and attendant other services. PYDS's technology offers both large and small clients virtually a one-stop for all of their customers' needs, whether services to the 'unbanked', processing transactions over the phone, over the Internet or through a customer service operation. The architecture that forms the basis of Payment Data's solutions can be designed to integrate with virtually any financial institution or portal. Beckoning to the Unbanked Couple the size of the payment solutions market with the ability of PYDS to provide the massive 'unbanked' market with simple, cost effective services to facilitate basic financial transactions outside of traditional banking relationships, and the potential becomes clear. We covered the 'unbanked' market in our PYDS Trading Alert, which I'm sure you've read by now. Payment Data has inked several great contracts over the past few months and we believe that there will be more to come. In addition to today's deal with Yodlee, the company previously secured contracts with Credit Payment Services and Kubra--the latter having the potential of providing $45 million worth of revenue to PYDS once fully implemented. Today's deal with Yodlee merely takes that number higher now and over the next three years with the potential of $11 million in further revenue.   Press Release Payment Data Systems and Yodlee, Inc. Sign Multi-year Funds Transfer Agreement - Three-year agreement creates revenue potential for PDS in excess of $11 million - San Antonio, December 2, 2004 -- Payment Data Systems, Inc. (OTC BB: PYDS), an integrated electronic payments solutions provider, announced today that Yodlee has selected Payment Data Systems to deliver an account-to-account funds transfer capability to supplement Yodlee's product offerings for their customer base of more than 150 leading financial institutions and portals.  The funds transfer solution will enable a consumer to open new accounts within a financial institution or to add funds incrementally to existing accounts from either external or internal accounts. Payment Data's agreement with Yodlee is for three years and has the potential of providing new revenues of more than $3,800,000 a year.  Louis Hoch, President and Chief Operating Officer said, "Market demand for this type of functionality appears to be quite strong.  With Yodlee's market share among the financial service providers we believe this capability creates a clear opportunity for both Yodlee and PDS to provide a highly needed service to consumers as well as create significant revenue possibilities." The PDS-Yodlee Funds Transfer solution is unique because it can be delivered with expansive, flexible, and adaptive capabilities and integrates with Yodlee's market-leading aggregation platform. The new Funds Transfer solution will be available to Yodlee customers in 2005.  About Payment Data Systems, Inc. Payment Data Systems, Inc., is an Integrated Payments Solution Provider delivering comprehensive, cost-effective solutions to billers and retailers for the processing and management of electronic payments via the Internet, point of sale, or payments taken by Customer Service Representatives or an Interactive Voice Response (IVR). Additional products available from PDS include services and products that can be implemented more quickly and less expensively than the alternative of adding multiple payments companies as these solutions offer a full range of payment processing capabilities. These service offerings include: one time and recurring ACH debits and credits, electronic lockbox and returned check services, Web pay acceptance of credit cards and checks, telephone pay to Customer Service Representatives for acceptance of credit cards and checks, Interactive Voice Response systems which completely automate the payment receiving process, and data warehousing that enable the storage and retrieval of all payment history from one location.  Payment Data is the owner of the electronic bill payment portal, http://www.bills.com. Bills.com has the ability to transmit electronic payments to thousands of national billers. For additional information, visit www.paymentdata.com. Contact: Michael Long, Investor Relations, Payment Data Systems, Inc. 210-249-4040 or via email at ir@paymentdata.com. 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