UNITED STATES
                   SECURITIES  AND  EXCHANGE  COMMISSION
                             WASHINGTON  D.C.  20549

                                FORM  S-8

         REGISTRATION  STATEMENT  UNDER  THE  SECURITIES  ACT  OF  1933

                         PAYMENT  DATA  SYSTEMS,  INC.

         (Exact  name  of  registrant  as  specified  in  its  charter)

                  NEVADA                             98-0190072
                 ---------                           ----------
     (State  or  other  jurisdiction                  (IRS  Employer
     of  incorporation  or  organization)          Identification  No.)

                           12500 SAN PEDRO, SUITE 120
                             SAN ANTONIO, TX  78216
                           Telephone:  (210) 249-4100
                                 --------------
    (Address,  Including  Zip Code and Telephone Number, of Principal Executive
                                    Offices)

                                 CONSULTING PLAN

                      (Full  Title  of  the  Plans)

                                 MICHAEL R. LONG
                             CHIEF EXECUTIVE OFFICER
                                 12500 SAN PEDRO
                                    SUITE 120
                            SAN ANTONIO, TEXAS 78216
                                 (210) 249-4100

                     (Name,  Address  and  Telephone  Number,
                including  Area  Code,  of  Agent  for  Service)

                          Copies of communications to:

                              AMY M. TROMBLY, ESQ.
                              TROMBLY BUSINESS LAW
                           1163 WALNUT STREET, SUITE 7
                                NEWTON, MA 02461
                                 (617) 243-0060


                         CALCULATION OF REGISTRATION FEE


                                  Proposed  maximum Proposed  maximum   Amount
Title  of  each     Amount  to  be offering price  aggregate offering     of
Class  of  securities                                               registration
To  be  registered   registered(1)  per share(2)       price(2)          fee

Common  Stock,
$.001  Par Value       300,000       $0.195            $58,500          $6.84

(1)  In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
registration  statement  also  covers an indeterminate amount of interests to be
offered  or  sold  pursuant  to  the  employee benefit plan(s) described herein.

(2)  The  price  of  $0.195  per  share,  which  was the average of the high and
low
prices  of  the  Registrant's  Common Stock, as reported on the Over-The-Counter
Bulletin  Board  on  May  27,  2005  is  set  forth  solely  for  purposes  of
calculating  the  registration fee pursuant to Rule 457(c) of the Securities Act
of  1933,  as  amended.



                                     PART  I

           INFORMATION  REQUIRED  IN  THE  SECTION  10(a)  PROSPECTUS

ITEM  1.     PLAN  INFORMATION

Pursuant to the Note to Part I of the Form S-8, the information required by Part
I  is  not  filed  with  the  Securities  and  Exchange  Commission.

ITEM  2.     REGISTRANT  INFORMATION  AND  EMPLOYEE  PLAN  ANNUAL  INFORMATION

The  Registrant  will  provide without charge to each person to whom a copy of a
Section  10(a)  Prospectus  hereunder  is  delivered,  upon  the oral or written
request of such person, a copy of any document incorporated in this Registration
Statement  by  reference.  Requests  for  such information should be directed to
Payment  Data  Systems,  12500  San  Pedro,  Suite  120,  San Antonio, TX 78216.

                             PART  II
    INFORMATION  REQUIRED  IN  THE  REGISTRATION  STATEMENT

ITEM  3.     INCORPORATION  OF  DOCUMENTS  BY  REFERENCE.

     The  following documents are incorporated by reference in this registration
statement.

     a)  The Registrant's Annual Report on Form 10-KSB for the fiscal year ended
December  31,  2004  filed  pursuant to Section 13(c) or 15(d) of the Securities
Exchange  Act  of  1934,  as  amended  (the  "Exchange  Act");

     b)   All  other  reports  filed  by Registrant pursuant to Section 13(c) or
15(d)  of  the Exchange Act since the end of the fiscal year covered by the Form
10-K  referred  to  in  (a)  above.

     c)   The  description  of  the common stock, $.001 par value per share (the
"Common Stock") of the Registrant is contained in the Registrant's annual report
on  Form  10-KSB.

     All  documents filed by the Registrant pursuant to Section 13(a), 13(c), 14
and  15(d)  of  the  Exchange  Act  subsequent  to the date of this registration
statement  and  prior  to  the  filing  of  a  post-effective  amendment to this
registration  statement  which indicates that all securities offered hereby have
been  sold  or  which  deregisters all securities then remaining unsold shall be
deemed  to be incorporated in this registration statement by reference and to be
a part hereof from the date of filing of such documents. Any statement contained
in  this  registration statement, in a supplement to this registration statement
or  in  a  document  incorporated  by  reference  herein,  shall be deemed to be
modified or superseded for purposes of this registration statement to the extent
that  a  statement  contained  herein or in any subsequently filed supplement to
this registration statement or in any document that is subsequently incorporated
by  reference  herein  modifies  or  supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to  constitute  a  part  of  this  registration  statement.


ITEM  4.     DESCRIPTION  OF  SECURITIES

Not  applicable.  The  class  of  securities  to  be offered is registered under
Section  12  of  the  Exchange  Act.

ITEM  5.     INTEREST  OF  NAMED  EXPERTS  AND  COUNSEL

No  expert  or counsel will receive a direct or indirect interest in our company
or  was  our  promoter,  underwriter,  voting  trustee,  director  or officer or
employee.  Nor  does  any  expert or counsel have any contingent based agreement
with  us  or  any  other  interest  in  or  connection  to  us.

ITEM  6.     INDEMNIFICATION  OF  DIRECTORS  AND  OFFICERS.

Nevada law generally sets forth the powers of the Company to indemnify officers,
directors,  employees  and agents. The Articles of Incorporation for the Company
provide  as  follows:

     No director or officer shall have any personal liability to the corporation
     or  its  stockholders  for  the  damages  for breach of fiduciary duty as a
     director  or officer, except that this Article shall not eliminate or limit
     the  liability  of  a  director  or  officer for (i) acts or omissions that
     involve intentional misconduct, fraud or a knowing violation of the law, or
     (ii)  the  payment  of  dividends  in violation of Nevada Revised Statutes.

The  By-laws  of  the  Company  provide  as  follows:

     Every  person  who was or is a party or is threatened to be made a party to
     or  is involved in any action, suit or proceeding, whether civil, criminal,
     administrative  or investigative, by reason of the fact that he or a person
     of  whom  he is the legal representative is or was a Director or officer of
     the  corporation  or is or was serving at the request of the corporation or
     for  its benefit as a Director or officer of another corporation, or as its
     representative  in a partnership, joint venture, trust or other enterprise,
     shall  be  indemnified and held harmless to the fullest legally permissible
     extent  under  the general Corporation Law of the State of Nevada from time
     to  time  against  all  expenses,  liability and loss (including attorney's
     fees,  judgment,  fines  and  amounts  paid  or  to  be paid in settlement)
     reasonably  incurred  or  suffered  by  him  in  connection  therewith. The
     expenses  of  officers  and  Directors  incurred  in  defending  a civil or
     criminal action, suit or proceeding must be paid by the corporation as they
     are incurred and in advance of the final disposition of the action, suit or
     proceeding  upon  receipt of an undertaking by or on behalf of the Director
     or officer to repay the amount if it is ultimately determined by a court of
     competent  jurisdiction  that  he  is not entitled to be indemnified by the
     corporation.  Such right of indemnification shall be a contract right which
     may  be  enforced  in  any  manner  desired  by  such person. Such right of
     indemnification  shall  not  be  exclusive  of  any  other right which such
     Directors,  officers  or representatives may have or hereafter acquire and,
     without  limiting  the generality of such statement, they shall be entitled
     to  their  respective rights of indemnification under any bylaw, agreement,
     vote  of  stockholders,  provision  of  law  or otherwise, as well as their
     rights  under  this  Article.

          The  Board  of  Directors  may  cause  the corporation to purchase and
     maintain  insurance  on  behalf  of  any person who is or was a Director or
     officer  of  the  corporation,  or  is or was serving at the request of the
     corporation  as  a  Director  or  officer of another corporation, or as its
     representative  in  a partnership, joint venture, trust or other enterprise
     against any liability asserted against such person and incurred in any such
     capacity  or  arising  out  of  such status, whether or not the corporation
     would  have  the  power  to  indemnify  such  person.

          The Board of Directors may from time to time adopt further Bylaws with
     respect  to  indemnification  and amend these and such Bylaws to provide at
     all  times the fullest indemnification permitted by the General Corporation
     Law  of  the  State  of  Nevada.

Under the foregoing provisions of the Registrant's Articles of Incorporation and
By-Laws, each person who is or was a director or officer shall be indemnified by
the  Registrant  to  the  full  extent  permitted  or  authorized by the General
Corporation  Law  of  Nevada.  Under such law, to the extent that such person is
successful on the merits of defense of a suit or proceeding brought against such
person  by  reason  of  the  fact  that  such person is a director or officer of
Payment  Data  Systems,  such  person  shall  be  indemnified  against expenses,
including  attorneys'  fees,  reasonably  incurred  in  connection  with  such
action.  If  unsuccessful  in  defense  of  a  third-party  civil  suit  or  a
criminal  suit  or  if  such  a  suit  is  settled,  such  a  person  shall  be
indemnified  under  such  law  against  both  (1)
expenses  (including  attorneys' fees) and (2) judgments, fines and amounts paid
in  settlement  if  such  person acted in good faith and in a manner such person
reasonably  believed  to  be in, or not opposed to, our best interests, and with
respect to any criminal action, had no reasonable cause to believe such person's
conduct  was  unlawful.

Insofar  as indemnification for liabilities arising under the Securities Act may
be  permitted  to  directors, officers and controlling persons of the Registrant
pursuant  to  the  foregoing  provisions,  or otherwise, the Registrant has been
advised  that  in  the  opinion  of  the Securities and Exchange Commission such
indemnification  is  against  public  policy  as  expressed  in  the Act and is,
therefore,  unenforceable.

ITEM  7.     EXEMPTION  FROM  REGISTRATION  CLAIMED.

             Not  applicable.

ITEM  8.     EXHIBITS

Exhibit  No.  Description
------------  -----------

5.1   Opinion  of  Amy  Trombly,  Esq.

10.1  Corporate  Consulting  Agreement between the Registrant and Theodore Smith
dated  April  26,  2005.

23.1  Consent  of  Akin,  Doherty,  Klein  &  Feuge,  P.C.

23.2  Consent  of  Counsel  (included  in  Exhibit  5.1  hereto).


ITEM  9.     UNDERTAKINGS

(a)     The  Registrant  hereby  undertakes:

     1.   To  file, during any period in which it offers or sells securities are
being  made,  a  post-effective  amendment  to  this  registration statement to:

          (i)  Include  any  additional  or  changed  material  information with
respect  to  the  plan  of  distribution.

     2.   For determining  liability  under  the Securities  Act  of  1933, that
each  post-effective  amendment  as  a  new  registration  statement  of  the
securities  offered, and the offering of the securities at that time to  be  the
initial  bona  fide  offering.

     3.   File a post-effective amendment to remove from registration any of the
securities  that  remain  unsold  at  the  end  of  the  offering.

For  determining  any  liability under the Securities Act, treat the information
omitted from the form of prospectus filed as part of this registration statement
in  reliance  upon  Rule  430A  and contained in form of prospectus filed by the
Registrant  under  Rule  424(b)(1),  or  (4)  or  497(h)  under  the  Securities
Act  as  part  of  this  registration  statement  as  of the time the Commission
declared  it  effective.

For  determining  any  liability  under  the  Securities  Act,  treat  each
post-effective  amendment  that  contains  a  form  of  prospectus  as  a  new
registration statement for the securities offered in the registration statement,
and  that  offering  of  the  securities  at  that time as the initial bona fide
offering  of  those  securities.


                                   SIGNATURES

     Pursuant  to the requirements of the Securities Act of 1933, the Registrant
certifies  that  it  has  reasonable grounds to believe that it meets all of the
requirements  for  filing  on  Form  S-8  and  has duly caused this registration
statement  to  be  signed  on  its  behalf  by  the  undersigned, thereunto duly
authorized  in  the  City  of  San  Antonio,  State  of  Texas on the 3rd day of
June,  2005.

                          PAYMENT  DATA  SYSTEMS,  INC.



 By:  /s/  Michael  Long
-------------------------------------
    Michael  R.  Long
    Chief  Executive
    Officer  and  Chief  Financial  Officer





SIGNATURES                                                       DATE



By:  /s/   Michael  R.  Long
    ---------------------------------                  June  3,  2005
Michael  R.  Long
Chief  Executive
Officer  and  Chief  Financial  Officer
(principal  executive  officer  and
principal  financial  and  accounting  officer)


By:  /s/  Louis  A.  Hoch                              June  3,  2005
    ---------------------------------
Louis  A.  Hoch
President,  Chief  Operating  Officer
and  Director


By:  /s/  Peter  G.  Kirby                             June  3,  2005
    ---------------------------------
Peter  G.  Kirby
Director


                                                                    Exhibit  5.1

                                AMY TROMBLY, ESQ.
                           1163 Walnut Street, Suite 7
                          Newton,  Massachusetts  02461
                                 (617) 243-00600

June  3,  2005

Payment  Data  Systems,  Inc.
12500  San  Pedro,  Suite  120
San  Antonio,  Texas  78216

Gentlemen:

I  have  acted  as  counsel  to  Payment  Data  Systems,  Inc.,  a  Nevada
corporation  (the  "Company"),  in  connection  with  the preparation and filing
with  the  Securities  and  Exchange  Commission  (the  "Commission")  of  a
Registration  Statement  on  Form  S-8  (the  "Registration  Statement"),
pursuant  to  which  the  Company  is  registering  under  the  Securities  Act
of 1933, as  amended  (the "Securities Act"), up to 300,000 shares of its common
stock,  $.001  par  value per share (the "Shares") which may be issued from time
to  time  on  a  delayed or continuous basis  pursuant  to  Rule  415  under the
Securities Act.  This opinion is being rendered in connection  with  the  filing
of  the  Registration Statement.  All capitalized  terms  used  herein  and  not
otherwise  defined  shall  have  the  respective  meanings  given  to  them  in
the  Registration  Statement.

In  connection  with  this  opinion,  I  have examined the Company's Articles of
Incorporation,  as  amended,  and  Bylaws,  as  amended;  and such other records
of  the  corporate  proceedings  of  the  Company  and  certificates  of  the
Company's  officers as I deemed relevant; and the Registration Statement and the
exhibits  filed  with  the  Commission.

In  my  examination, I have assumed the genuineness of all signatures, the legal
capacity  of  natural persons, the authenticity of all documents submitted to me
as originals, the conformity to original documents of all documents submitted to
me  as  certified or photostatic copies and the authenticity of the originals of
such  copies.

Based  upon  the foregoing, and subject to the limitations set forth below, I am
of the opinion that, once (i) the Registration Statement, as amended, has become
effective  under  the  Securities  Act,  (ii)  the  Shares  have  been issued as
contemplated  by  the Registration Statement, and (iii) the Company has received
the  consideration  in  the  manner described in the Registration Statement, the
Shares  will be duly and validly issued, fully paid and non-assessable shares of
the  Common  Stock.

No  opinion  is  expressed  herein  with  respect  to  the  qualification of the
Shares  under  the  securities  or  blue  sky  laws  of  any  state  or  any
foreign  jurisdiction.

This  opinion  is based upon currently existing statutes, rules, regulations and
judicial decisions, and I disclaim any obligation to advise you of any change in
any  of  these  sources of law or subsequent legal or factual developments which
might  affect  any  matters  or  opinions  set  forth  herein.

I  understand  that  you  wish  to  file  this  opinion  as  an  exhibit  to the
Registration  Statement,  and  I  hereby  consent  thereto.


                                            Very  truly  yours,

                                            /s/  Amy  Trombly,  Esq.
                                           ---------------------------

                                                Amy  Trombly,  Esq.


                                                                   Exhibit  10.1

                         CORPORATE CONSULTING AGREEMENT

This Agreement ("Agreement") dated April 26, 2005 is by and between Payment Data
Systems,  Inc,  a  Nevada  Corporation  (the  "Company"),  and Theodore Smith of
Edgarization,  LLC  (the  "Consultant"),  a  Connecticut  Corporation.

WHEREAS, the Company is a publicly traded company engaged in the business of the
telecommunications.

WHEREAS,  Consultant  has  unique  experience,  knowledge  and  skills regarding
consulting  for  public  companies

WHEREAS,  the  Company desires to obtain the benefits of Consultant's experience
and  know-how,  and accordingly, the Company has offered to engage Consultant to
render  services  to  the  Company  on  the terms and conditions hereinafter set
forth;

WHEREAS,  Consultant  desires  to  accept  such  engagement  upon such terms and
conditions  hereinafter  set  forth.

NOWTHEREFORE  in  consideration  of the foregoing, the parties agree as follows:

Section  1.     SERVICES  RENDERED

Consultant  shall  (i)  advise  the Company with respect to operations, business
strategy,  capital  structure  and  other  matters pertaining to the Business as
shall  be  specified  from  time  to time by the Company's President and/or such
other  officer(s)  as  the  Company's Board of Directors shall designate to have
principal  responsibility  for  the operation of the Business and (ii) assist in
reviewing  material  transactions.

Consultant  shall  (i)  review,  transfer  and  submit to the SEC all filings in
proper  electronic  EDGAR  recognized  format  on behalf of the Company and (ii)
assist  with  any  reviews and/or revisions of those documents before filing and
complete  all  filings  for  the  term  of  this  agreement.

Section  2.     COMPENSATION

(a)  CONSULTING FEES. In consideration for the availability of Consultant during
the  term  hereunder  and  the  services  rendered  pursuant  to this Agreement,
promptly  upon execution of this Agreement, the Company will issue to Consultant
as payment 300,000 (three hundred thousand) fully paid and non-assessable shares
of  Common Stock of the Company (the "Shares"). The Shares shall be issued to an
individual  designee  of  the  Consultant.

(b)  REIMBURSEMENT OF EXPENSES. The Company shall reimburse Consultant for those
reasonable  and necessary out-of-pocket expenses which have been approved by the
President  of the Company prior to their incurrence and which have been incurred
by  Consultant  in  connection  with  the  rendering  of services hereunder. Any
reimbursement  to  be made by the Company pursuant to this Section shall be made
following submission to the Company by Consultant of reasonable documentation of
the  expenses  incurred.

(c) REGISTRATION. The Shares issued hereunder shall be promptly registered under
an  S-8  Registration  Statement  or  shares  will  be issued from the Company's
comprehensive  stock  plan  and  will  be transferred to the Consultant as fully
registered  shares.

(d)  FILING  FEES. For each filing completed with the SEC, the Company shall pay
to  the  Consultant  nine dollars ($9.00) per page of the final copy to be filed
through  EDGAR.  Additional filing fees of seventy-five dollars ($75.00) will be
applied  to  each  filing EXCEPT those on Form 3, Form 4 and Form 5. Any filings
the  Company completes that require extra payment as defined by the SEC and paid
to  the  SEC  shall  be  the  responsibility  of  the  Company.

Section  3.     RELATIONSHIP  OF  PARTIES

This Agreement shall not constitute an employer-employee relationship. It is the
intention  of  each party that Consultant shall be an independent contractor and
not  an  employee  of  the  Company.  The Company shall not withhold any amounts
therefrom  as  U.S.  federal  or  state  income  tax withholding, or as employee
contribution  to  Social  Security  or any other employer withholding applicable
under  state  or  federal  law.

Section  4.     TERM

The  term  of this Agreement shall be eight (8) months commencing on the date in
the  preamble  date  and  year first above written, and will automatically renew
unless canceled Thirty (30) days prior to the end of the term of this agreement,
if  not  terminated  by  either  party.

Section  5.     TERMINATION

This  Agreement may be terminated by either party with or without cause with one
hundred-eighty (180) calendar days prior written notice given by the terminating
party.  Termination  of  the  Agreement  does  not  relieve  the  Company of its
obligation  to  remunerate Consultant pursuant to this Agreement, and the Shares
issued  to  Consultant upon execution of this Agreement shall be non-refundable.
Upon  termination,  any  outstanding  remuneration  due  Consultant for services
rendered  shall  be  paid  prior  within  3  (three)  business  days  following
termination.

Section  6.     INDEMNIFICATION

Consultant does not guarantee the accuracy, completeness, timeliness, or fitness
for  any particular purpose, of the information which it files. Consultant shall
not  be  liable  for  any  loss,  including loss of profits, lost opportunities,
indirect,  special,  incident,  consequential,  punitive,  or  any other damages
whatsoever  or  other similar damages, resulting directly or indirectly from use
of  the  Consultant's  service.

Consultant shall not be liable for any loss due either to their negligence or to
any  cause  beyond  their  reasonable  control.

Consultant  assumes  no  responsibility  or  liability  for  any  inaccuracies,
misstatements,  errors,  or  fabrications,  contained  within  documents,  data,
materials,  for  which  it  is  responsible  to  file,  either  through error or
negligence.  The  Company agrees to hold Consultant and its officers, directors,
employees, agents and consultants harmless for any and all claims, losses, costs
or  damage  whatsoever  arising out of, resulting from, or in any way related to
the  use  of  electronic  data  files  provided  by Company, whether that use is
authorized  or  unauthorized,  for any act resulting directly or indirectly from
any  filings,  its  data, content, materials, and documents. Consultant bears no
responsibility  for  the information in the electronic data files once it leaves
the  Consultant's  office  or  web  site.  The  undersigned understands that the
electronic  data files are subject to applicable copyright laws and agrees to be
bound  by  same.

Section  7.     GOVERNING  LAW

This  Agreement  shall  be  governed  by  the  laws  of  the  Commonwealth  of
Massachusetts,  without  regard  to the conflict of law rules of such state. Any
controversy,  claim  or  dispute arising out of this Agreement, shall settled by
binding arbitration in the County of Suffolk, MA in accordance with the rules of
the  American  Arbitration  Association there in effect, except that the parties
thereto  shall  have  any  right  to discovery as would permitted by the Federal
Rules  of  Civil  Procedure.  The  prevailing  Party  shall  be  entitled  to
reimbursement  of  actual costs and attorney's fees from the arbitration and the
decision  of  the  Arbitrator(s)  shall  be  final.

IN  WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year  first  above  written.

     Payment  Data  Systems,  Inc.

     /s/  Michael  Long
     ------------------
     Name:  Michael  Long
     Title:  CEO

     Consultant

     /s/  Theodore  J.  Smith,  Jr.
     ------------------------------
     By:  Theodore  J.  Smith,  Jr.




                                  Exhibit 23.1


                       AKIN, DOHERTY, KLEIN & FEUGE, P.C.
                          Certified Public Accountants
                       8610 North New Braunfels, Suite 101
                            San Antonio, Texas  78217
                             Telephone: 210 829-1300
                                Fax: 210 829-4080




                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

      As  independent  public  accountants  for  Payment Data Systems, Inc. (the
"Company"),  we  hereby  consent  to  the  incorporation  by  reference  in this
Registration  Statement  of  our report dated February 18, 2005, except for Note
15,  to  which the date is March 11, 2005, included in the Company's Form 10-KSB
for the year ended December 31, 2004, and to all references to our firm included
in  this  Registration  Statement.

/s/  Akin,  Doherty,  Klein  &  Feuge

Akin,  Doherty,  Klein  &  Feuge,  P.C.
San  Antonio,  Texas



By:      /s/  Thomas  A.  Akin


Date:  June  3,  2005
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{"company-data": {"conformed-name": "PAYMENT DATA SYSTEMS INC", "cik": "0001088034", "assigned-sic": "6099", "irs-number": "980190072", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-125510", "film-number": "05878304"}, "business-address": {"street1": "211 N LOOP 1604 EAST", "street2": "SUITE 200", "city": "SAN ANTONIO", "state": "TX", "zip": "78232", "phone": "2104025039"}, "mail-address": {"street1": "211 N LOOP 1604 EAST", "street2": "STE 200", "city": "SAN ANTONIO", "state": "TX", "zip": "78232"}, "former-company": [{"former-conformed-name": "BILLSERV INC", "date-changed": "20011219"}, {"former-conformed-name": "BILLSERV COM INC", "date-changed": "19990607"}]}
UNITED STATES
                   SECURITIES  AND  EXCHANGE  COMMISSION
                             WASHINGTON  D.C.  20549

                                FORM  S-8

         REGISTRATION  STATEMENT  UNDER  THE  SECURITIES  ACT  OF  1933

                         PAYMENT  DATA  SYSTEMS,  INC.

         (Exact  name  of  registrant  as  specified  in  its  charter)

                  NEVADA                             98-0190072
                 ---------                           ----------
     (State  or  other  jurisdiction                  (IRS  Employer
     of  incorporation  or  organization)          Identification  No.)

                           12500 SAN PEDRO, SUITE 120
                             SAN ANTONIO, TX  78216
                           Telephone:  (210) 249-4100
                                 --------------
    (Address,  Including  Zip Code and Telephone Number, of Principal Executive
                                    Offices)

                                 CONSULTING PLAN

                      (Full  Title  of  the  Plans)

                                 MICHAEL R. LONG
                             CHIEF EXECUTIVE OFFICER
                                 12500 SAN PEDRO
                                    SUITE 120
                            SAN ANTONIO, TEXAS 78216
                                 (210) 249-4100

                     (Name,  Address  and  Telephone  Number,
                including  Area  Code,  of  Agent  for  Service)

                          Copies of communications to:

                              AMY M. TROMBLY, ESQ.
                              TROMBLY BUSINESS LAW
                           1163 WALNUT STREET, SUITE 7
                                NEWTON, MA 02461
                                 (617) 243-0060

                         CALCULATION OF REGISTRATION FEE

                                  Proposed  maximum Proposed  maximum   Amount
Title  of  each     Amount  to  be offering price  aggregate offering     of
Class  of  securities                                               registration
To  be  registered   registered(1)  per share(2)       price(2)          fee

Common  Stock,
$.001  Par Value       300,000       $0.195            $58,500          $6.84

(1)  In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
registration  statement  also  covers an indeterminate amount of interests to be
offered  or  sold  pursuant  to  the  employee benefit plan(s) described herein.

(2)  The  price  of  $0.195  per  share,  which  was the average of the high and
low
prices  of  the  Registrant's  Common Stock, as reported on the Over-The-Counter
Bulletin  Board  on  May  27,  2005  is  set  forth  solely  for  purposes  of
calculating  the  registration fee pursuant to Rule 457(c) of the Securities Act
of  1933,  as  amended.

                                     PART  I

           INFORMATION  REQUIRED  IN  THE  SECTION  10(a)  PROSPECTUS

ITEM  1.     PLAN  INFORMATION

Pursuant to the Note to Part I of the Form S-8, the information required by Part
I  is  not  filed  with  the  Securities  and  Exchange  Commission.

ITEM  2.     REGISTRANT  INFORMATION  AND  EMPLOYEE  PLAN  ANNUAL  INFORMATION

The  Registrant  will  provide without charge to each person to whom a copy of a
Section  10(a)  Prospectus  hereunder  is  delivered,  upon  the oral or written
request of such person, a copy of any document incorporated in this Registration
Statement  by  reference.  Requests  for  such information should be directed to
Payment  Data  Systems,  12500  San  Pedro,  Suite  120,  San Antonio, TX 78216.

                             PART  II
    INFORMATION  REQUIRED  IN  THE  REGISTRATION  STATEMENT

ITEM  3.     INCORPORATION  OF  DOCUMENTS  BY  REFERENCE.

     The  following documents are incorporated by reference in this registration
statement.

     a)  The Registrant's Annual Report on Form 10-KSB for the fiscal year ended
December  31,  2004  filed  pursuant to Section 13(c) or 15(d) of the Securities
Exchange  Act  of  1934,  as  amended  (the  "Exchange  Act");

     b)   All  other  reports  filed  by Registrant pursuant to Section 13(c) or
15(d)  of  the Exchange Act since the end of the fiscal year covered by the Form
10-K  referred  to  in  (a)  above.

     c)   The  description  of  the common stock, $.001 par value per share (the
"Common Stock") of the Registrant is contained in the Registrant's annual report
on  Form  10-KSB.

     All  documents filed by the Registrant pursuant to Section 13(a), 13(c), 14
and  15(d)  of  the  Exchange  Act  subsequent  to the date of this registration
statement  and  prior  to  the  filing  of  a  post-effective  amendment to this
registration  statement  which indicates that all securities offered hereby have
been  sold  or  which  deregisters all securities then remaining unsold shall be
deemed  to be incorporated in this registration statement by reference and to be
a part hereof from the date of filing of such documents. Any statement contained
in  this  registration statement, in a supplement to this registration statement
or  in  a  document  incorporated  by  reference  herein,  shall be deemed to be
modified or superseded for purposes of this registration statement to the extent
that  a  statement  contained  herein or in any subsequently filed supplement to
this registration statement or in any document that is subsequently incorporated
by  reference  herein  modifies  or  supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to  constitute  a  part  of  this  registration  statement.

ITEM  4.     DESCRIPTION  OF  SECURITIES

Not  applicable.  The  class  of  securities  to  be offered is registered under
Section  12  of  the  Exchange  Act.

ITEM  5.     INTEREST  OF  NAMED  EXPERTS  AND  COUNSEL

No  expert  or counsel will receive a direct or indirect interest in our company
or  was  our  promoter,  underwriter,  voting  trustee,  director  or officer or
employee.  Nor  does  any  expert or counsel have any contingent based agreement
with  us  or  any  other  interest  in  or  connection  to  us.

ITEM  6.     INDEMNIFICATION  OF  DIRECTORS  AND  OFFICERS.

Nevada law generally sets forth the powers of the Company to indemnify officers,
directors,  employees  and agents. The Articles of Incorporation for the Company
provide  as  follows:

     No director or officer shall have any personal liability to the corporation
     or  its  stockholders  for  the  damages  for breach of fiduciary duty as a
     director  or officer, except that this Article shall not eliminate or limit
     the  liability  of  a  director  or  officer for (i) acts or omissions that
     involve intentional misconduct, fraud or a knowing violation of the law, or
     (ii)  the  payment  of  dividends  in violation of Nevada Revised Statutes.

The  By-laws  of  the  Company  provide  as  follows:

     Every  person  who was or is a party or is threatened to be made a party to
     or  is involved in any action, suit or proceeding, whether civil, criminal,
     administrative  or investigative, by reason of the fact that he or a person
     of  whom  he is the legal representative is or was a Director or officer of
     the  corporation  or is or was serving at the request of the corporation or
     for  its benefit as a Director or officer of another corporation, or as its
     representative  in a partnership, joint venture, trust or other enterprise,
     shall  be  indemnified and held harmless to the fullest legally permissible
     extent  under  the general Corporation Law of the State of Nevada from time
     to  time  against  all  expenses,  liability and loss (including attorney's
     fees,  judgment,  fines  and  amounts  paid  or  to  be paid in settlement)
     reasonably  incurred  or  suffered  by  him  in  connection  therewith. The
     expenses  of  officers  and  Directors  incurred  in  defending  a civil or
     criminal action, suit or proceeding must be paid by the corporation as they
     are incurred and in advance of the final disposition of the action, suit or
     proceeding  upon  receipt of an undertaking by or on behalf of the Director
     or officer to repay the amount if it is ultimately determined by a court of
     competent  jurisdiction  that  he  is not entitled to be indemnified by the
     corporation.  Such right of indemnification shall be a contract right which
     may  be  enforced  in  any  manner  desired  by  such person. Such right of
     indemnification  shall  not  be  exclusive  of  any  other right which such
     Directors,  officers  or representatives may have or hereafter acquire and,
     without  limiting  the generality of such statement, they shall be entitled
     to  their  respective rights of indemnification under any bylaw, agreement,
     vote  of  stockholders,  provision  of  law  or otherwise, as well as their
     rights  under  this  Article.

          The  Board  of  Directors  may  cause  the corporation to purchase and
     maintain  insurance  on  behalf  of  any person who is or was a Director or
     officer  of  the  corporation,  or  is or was serving at the request of the
     corporation  as  a  Director  or  officer of another corporation, or as its
     representative  in  a partnership, joint venture, trust or other enterprise
     against any liability asserted against such person and incurred in any such
     capacity  or  arising  out  of  such status, whether or not the corporation
     would  have  the  power  to  indemnify  such  person.

          The Board of Directors may from time to time adopt further Bylaws with
     respect  to  indemnification  and amend these and such Bylaws to provide at
     all  times the fullest indemnification permitted by the General Corporation
     Law  of  the  State  of  Nevada.

Under the foregoing provisions of the Registrant's Articles of Incorporation and
By-Laws, each person who is or was a director or officer shall be indemnified by
the  Registrant  to  the  full  extent  permitted  or  authorized by the General
Corporation  Law  of  Nevada.  Under such law, to the extent that such person is
successful on the merits of defense of a suit or proceeding brought against such
person  by  reason  of  the  fact  that  such person is a director or officer of
Payment  Data  Systems,  such  person  shall  be  indemnified  against expenses,
including  attorneys'  fees,  reasonably  incurred  in  connection  with  such
action.  If  unsuccessful  in  defense  of  a  third-party  civil  suit  or  a
criminal  suit  or  if  such  a  suit  is  settled,  such  a  person  shall  be
indemnified  under  such  law  against  both  (1)
expenses  (including  attorneys' fees) and (2) judgments, fines and amounts paid
in  settlement  if  such  person acted in good faith and in a manner such person
reasonably  believed  to  be in, or not opposed to, our best interests, and with
respect to any criminal action, had no reasonable cause to believe such person's
conduct  was  unlawful.

Insofar  as indemnification for liabilities arising under the Securities Act may
be  permitted  to  directors, officers and controlling persons of the Registrant
pursuant  to  the  foregoing  provisions,  or otherwise, the Registrant has been
advised  that  in  the  opinion  of  the Securities and Exchange Commission such
indemnification  is  against  public  policy  as  expressed  in  the Act and is,
therefore,  unenforceable.

ITEM  7.     EXEMPTION  FROM  REGISTRATION  CLAIMED.

             Not  applicable.

ITEM  8.     EXHIBITS

Exhibit  No.  Description
------------  -----------

5.1   Opinion  of  Amy  Trombly,  Esq.

10.1  Corporate  Consulting  Agreement between the Registrant and Theodore Smith
dated  April  26,  2005.

23.1  Consent  of  Akin,  Doherty,  Klein  &  Feuge,  P.C.

23.2  Consent  of  Counsel  (included  in  Exhibit  5.1  hereto).

ITEM  9.     UNDERTAKINGS

(a)     The  Registrant  hereby  undertakes:

     1.   To  file, during any period in which it offers or sells securities are
being  made,  a  post-effective  amendment  to  this  registration statement to:

          (i)  Include  any  additional  or  changed  material  information with
respect  to  the  plan  of  distribution.

     2.   For determining  liability  under  the Securities  Act  of  1933, that
each  post-effective  amendment  as  a  new  registration  statement  of  the
securities  offered, and the offering of the securities at that time to  be  the
initial  bona  fide  offering.

     3.   File a post-effective amendment to remove from registration any of the
securities  that  remain  unsold  at  the  end  of  the  offering.

For  determining  any  liability under the Securities Act, treat the information
omitted from the form of prospectus filed as part of this registration statement
in  reliance  upon  Rule  430A  and contained in form of prospectus filed by the
Registrant  under  Rule  424(b)(1),  or  (4)  or  497(h)  under  the  Securities
Act  as  part  of  this  registration  statement  as  of the time the Commission
declared  it  effective.

For  determining  any  liability  under  the  Securities  Act,  treat  each
post-effective  amendment  that  contains  a  form  of  prospectus  as  a  new
registration statement for the securities offered in the registration statement,
and  that  offering  of  the  securities  at  that time as the initial bona fide
offering  of  those  securities.

                                   SIGNATURES

     Pursuant  to the requirements of the Securities Act of 1933, the Registrant
certifies  that  it  has  reasonable grounds to believe that it meets all of the
requirements  for  filing  on  Form  S-8  and  has duly caused this registration
statement  to  be  signed  on  its  behalf  by  the  undersigned, thereunto duly
authorized  in  the  City  of  San  Antonio,  State  of  Texas on the 3rd day of
June,  2005.

                          PAYMENT  DATA  SYSTEMS,  INC.

 By:  /s/  Michael  Long
-------------------------------------
    Michael  R.  Long
    Chief  Executive
    Officer  and  Chief  Financial  Officer

SIGNATURES                                                       DATE

By:  /s/   Michael  R.  Long
    ---------------------------------                  June  3,  2005
Michael  R.  Long
Chief  Executive
Officer  and  Chief  Financial  Officer
(principal  executive  officer  and
principal  financial  and  accounting  officer)

By:  /s/  Louis  A.  Hoch                              June  3,  2005
    ---------------------------------
Louis  A.  Hoch
President,  Chief  Operating  Officer
and  Director

By:  /s/  Peter  G.  Kirby                             June  3,  2005
    ---------------------------------
Peter  G.  Kirby
Director

                                                                    Exhibit  5.1

                                AMY TROMBLY, ESQ.
                           1163 Walnut Street, Suite 7
                          Newton,  Massachusetts  02461
                                 (617) 243-00600

June  3,  2005

Payment  Data  Systems,  Inc.
12500  San  Pedro,  Suite  120
San  Antonio,  Texas  78216

Gentlemen:

I  have  acted  as  counsel  to  Payment  Data  Systems,  Inc.,  a  Nevada
corporation  (the  "Company"),  in  connection  with  the preparation and filing
with  the  Securities  and  Exchange  Commission  (the  "Commission")  of  a
Registration  Statement  on  Form  S-8  (the  "Registration  Statement"),
pursuant  to  which  the  Company  is  registering  under  the  Securities  Act
of 1933, as  amended  (the "Securities Act"), up to 300,000 shares of its common
stock,  $.001  par  value per share (the "Shares") which may be issued from time
to  time  on  a  delayed or continuous basis  pursuant  to  Rule  415  under the
Securities Act.  This opinion is being rendered in connection  with  the  filing
of  the  Registration Statement.  All capitalized  terms  used  herein  and  not
otherwise  defined  shall  have  the  respective  meanings  given  to  them  in
the  Registration  Statement.

In  connection  with  this  opinion,  I  have examined the Company's Articles of
Incorporation,  as  amended,  and  Bylaws,  as  amended;  and such other records
of  the  corporate  proceedings  of  the  Company  and  certificates  of  the
Company's  officers as I deemed relevant; and the Registration Statement and the
exhibits  filed  with  the  Commission.

In  my  examination, I have assumed the genuineness of all signatures, the legal
capacity  of  natural persons, the authenticity of all documents submitted to me
as originals, the conformity to original documents of all documents submitted to
me  as  certified or photostatic copies and the authenticity of the originals of
such  copies.

Based  upon  the foregoing, and subject to the limitations set forth below, I am
of the opinion that, once (i) the Registration Statement, as amended, has become
effective  under  the  Securities  Act,  (ii)  the  Shares  have  been issued as
contemplated  by  the Registration Statement, and (iii) the Company has received
the  consideration  in  the  manner described in the Registration Statement, the
Shares  will be duly and validly issued, fully paid and non-assessable shares of
the  Common  Stock.

No  opinion  is  expressed  herein  with  respect  to  the  qualification of the
Shares  under  the  securities  or  blue  sky  laws  of  any  state  or  any
foreign  jurisdiction.

This  opinion  is based upon currently existing statutes, rules, regulations and
judicial decisions, and I disclaim any obligation to advise you of any change in
any  of  these  sources of law or subsequent legal or factual developments which
might  affect  any  matters  or  opinions  set  forth  herein.

I  understand  that  you  wish  to  file  this  opinion  as  an  exhibit  to the
Registration  Statement,  and  I  hereby  consent  thereto.

                                            Very  truly  yours,

                                            /s/  Amy  Trombly,  Esq.
                                           ---------------------------

                                                Amy  Trombly,  Esq.

                                                                   Exhibit  10.1

                         CORPORATE CONSULTING AGREEMENT

This Agreement ("Agreement") dated April 26, 2005 is by and between Payment Data
Systems,  Inc,  a  Nevada  Corporation  (the  "Company"),  and Theodore Smith of
Edgarization,  LLC  (the  "Consultant"),  a  Connecticut  Corporation.

WHEREAS, the Company is a publicly traded company engaged in the business of the
telecommunications.

WHEREAS,  Consultant  has  unique  experience,  knowledge  and  skills regarding
consulting  for  public  companies

WHEREAS,  the  Company desires to obtain the benefits of Consultant's experience
and  know-how,  and accordingly, the Company has offered to engage Consultant to
render  services  to  the  Company  on  the terms and conditions hereinafter set
forth;

WHEREAS,  Consultant  desires  to  accept  such  engagement  upon such terms and
conditions  hereinafter  set  forth.

NOWTHEREFORE  in  consideration  of the foregoing, the parties agree as follows:

Section  1.     SERVICES  RENDERED

Consultant  shall  (i)  advise  the Company with respect to operations, business
strategy,  capital  structure  and  other  matters pertaining to the Business as
shall  be  specified  from  time  to time by the Company's President and/or such
other  officer(s)  as  the  Company's Board of Directors shall designate to have
principal  responsibility  for  the operation of the Business and (ii) assist in
reviewing  material  transactions.

Consultant  shall  (i)  review,  transfer  and  submit to the SEC all filings in
proper  electronic  EDGAR  recognized  format  on behalf of the Company and (ii)
assist  with  any  reviews and/or revisions of those documents before filing and
complete  all  filings  for  the  term  of  this  agreement.

Section  2.     COMPENSATION

(a)  CONSULTING FEES. In consideration for the availability of Consultant during
the  term  hereunder  and  the  services  rendered  pursuant  to this Agreement,
promptly  upon execution of this Agreement, the Company will issue to Consultant
as payment 300,000 (three hundred thousand) fully paid and non-assessable shares
of  Common Stock of the Company (the "Shares"). The Shares shall be issued to an
individual  designee  of  the  Consultant.

(b)  REIMBURSEMENT OF EXPENSES. The Company shall reimburse Consultant for those
reasonable  and necessary out-of-pocket expenses which have been approved by the
President  of the Company prior to their incurrence and which have been incurred
by  Consultant  in  connection  with  the  rendering  of services hereunder. Any
reimbursement  to  be made by the Company pursuant to this Section shall be made
following submission to the Company by Consultant of reasonable documentation of
the  expenses  incurred.

(c) REGISTRATION. The Shares issued hereunder shall be promptly registered under
an  S-8  Registration  Statement  or  shares  will  be issued from the Company's
comprehensive  stock  plan  and  will  be transferred to the Consultant as fully
registered  shares.

(d)  FILING  FEES. For each filing completed with the SEC, the Company shall pay
to  the  Consultant  nine dollars ($9.00) per page of the final copy to be filed
through  EDGAR.  Additional filing fees of seventy-five dollars ($75.00) will be
applied  to  each  filing EXCEPT those on Form 3, Form 4 and Form 5. Any filings
the  Company completes that require extra payment as defined by the SEC and paid
to  the  SEC  shall  be  the  responsibility  of  the  Company.

Section  3.     RELATIONSHIP  OF  PARTIES

This Agreement shall not constitute an employer-employee relationship. It is the
intention  of  each party that Consultant shall be an independent contractor and
not  an  employee  of  the  Company.  The Company shall not withhold any amounts
therefrom  as  U.S.  federal  or  state  income  tax withholding, or as employee
contribution  to  Social  Security  or any other employer withholding applicable
under  state  or  federal  law.

Section  4.     TERM

The  term  of this Agreement shall be eight (8) months commencing on the date in
the  preamble  date  and  year first above written, and will automatically renew
unless canceled Thirty (30) days prior to the end of the term of this agreement,
if  not  terminated  by  either  party.

Section  5.     TERMINATION

This  Agreement may be terminated by either party with or without cause with one
hundred-eighty (180) calendar days prior written notice given by the terminating
party.  Termination  of  the  Agreement  does  not  relieve  the  Company of its
obligation  to  remunerate Consultant pursuant to this Agreement, and the Shares
issued  to  Consultant upon execution of this Agreement shall be non-refundable.
Upon  termination,  any  outstanding  remuneration  due  Consultant for services
rendered  shall  be  paid  prior  within  3  (three)  business  days  following
termination.

Section  6.     INDEMNIFICATION

Consultant does not guarantee the accuracy, completeness, timeliness, or fitness
for  any particular purpose, of the information which it files. Consultant shall
not  be  liable  for  any  loss,  including loss of profits, lost opportunities,
indirect,  special,  incident,  consequential,  punitive,  or  any other damages
whatsoever  or  other similar damages, resulting directly or indirectly from use
of  the  Consultant's  service.

Consultant shall not be liable for any loss due either to their negligence or to
any  cause  beyond  their  reasonable  control.

Consultant  assumes  no  responsibility  or  liability  for  any  inaccuracies,
misstatements,  errors,  or  fabrications,  contained  within  documents,  data,
materials,  for  which  it  is  responsible  to  file,  either  through error or
negligence.  The  Company agrees to hold Consultant and its officers, directors,
employees, agents and consultants harmless for any and all claims, losses, costs
or  damage  whatsoever  arising out of, resulting from, or in any way related to
the  use  of  electronic  data  files  provided  by Company, whether that use is
authorized  or  unauthorized,  for any act resulting directly or indirectly from
any  filings,  its  data, content, materials, and documents. Consultant bears no
responsibility  for  the information in the electronic data files once it leaves
the  Consultant's  office  or  web  site.  The  undersigned understands that the
electronic  data files are subject to applicable copyright laws and agrees to be
bound  by  same.

Section  7.     GOVERNING  LAW

This  Agreement  shall  be  governed  by  the  laws  of  the  Commonwealth  of
Massachusetts,  without  regard  to the conflict of law rules of such state. Any
controversy,  claim  or  dispute arising out of this Agreement, shall settled by
binding arbitration in the County of Suffolk, MA in accordance with the rules of
the  American  Arbitration  Association there in effect, except that the parties
thereto  shall  have  any  right  to discovery as would permitted by the Federal
Rules  of  Civil  Procedure.  The  prevailing  Party  shall  be  entitled  to
reimbursement  of  actual costs and attorney's fees from the arbitration and the
decision  of  the  Arbitrator(s)  shall  be  final.

IN  WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year  first  above  written.

     Payment  Data  Systems,  Inc.

     /s/  Michael  Long
     ------------------
     Name:  Michael  Long
     Title:  CEO

     Consultant

     /s/  Theodore  J.  Smith,  Jr.
     ------------------------------
     By:  Theodore  J.  Smith,  Jr.

                                  Exhibit 23.1

                       AKIN, DOHERTY, KLEIN & FEUGE, P.C.
                          Certified Public Accountants
                       8610 North New Braunfels, Suite 101
                            San Antonio, Texas  78217
                             Telephone: 210 829-1300
                                Fax: 210 829-4080

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

      As  independent  public  accountants  for  Payment Data Systems, Inc. (the
"Company"),  we  hereby  consent  to  the  incorporation  by  reference  in this
Registration  Statement  of  our report dated February 18, 2005, except for Note
15,  to  which the date is March 11, 2005, included in the Company's Form 10-KSB
for the year ended December 31, 2004, and to all references to our firm included
in  this  Registration  Statement.

/s/  Akin,  Doherty,  Klein  &  Feuge

Akin,  Doherty,  Klein  &  Feuge,  P.C.
San  Antonio,  Texas

By:      /s/  Thomas  A.  Akin

Date:  June  3,  2005