-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 Jz5VaTwvDGRlLLZUD+u13WKTFiMHHPqJsFK1QFLzrKz/LBUvsihTlIS5eIJs9Eau
 odyehnei6n/mPOJng4yj9A==

<SEC-DOCUMENT>0001231742-07-000044.txt : 20070123
<SEC-HEADER>0001231742-07-000044.hdr.sgml : 20070123
<ACCEPTANCE-DATETIME>20070123164527
ACCESSION NUMBER:		0001231742-07-000044
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20070118
ITEM INFORMATION:		Unregistered Sales of Equity Securities
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20070123
DATE AS OF CHANGE:		20070123

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PAYMENT DATA SYSTEMS INC
		CENTRAL INDEX KEY:			0001088034
		STANDARD INDUSTRIAL CLASSIFICATION:	FUNCTIONS RELATED TO DEPOSITORY BANKING, NEC [6099]
		IRS NUMBER:				980190072
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-30152
		FILM NUMBER:		07547118

	BUSINESS ADDRESS:	
		STREET 1:		12500 SAN PEDRO
		STREET 2:		SUITE 120
		CITY:			SAN ANTONIO
		STATE:			TX
		ZIP:			78216
		BUSINESS PHONE:		2102494100

	MAIL ADDRESS:	
		STREET 1:		12500 SAN PEDRO
		STREET 2:		STE 120
		CITY:			SAN ANTONIO
		STATE:			TX
		ZIP:			78216

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	BILLSERV INC
		DATE OF NAME CHANGE:	20011219

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	BILLSERV COM INC
		DATE OF NAME CHANGE:	19990607
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>pyds8k123.txt
<DESCRIPTION>8-K
<TEXT>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT
     PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


Date  of  Report  (Date  of  earliest  event  reported)     January  18,  2007

                             PAYMENT  DATA  SYSTEMS,  INC.
             (Exact name of registrant as specified in its charter)

            NEVADA                    000-30152                 98-0190072
(State  or  other  jurisdiction     (Commission               (IRS  Employer
      of  incorporation)            File  Number)           Identification  No.)

  12500  SAN  PEDRO,  SUITE  120,  SAN  ANTONIO,  TEXAS         78216
        (Address of principal executive offices)              (Zip Code)


Registrant's  telephone  number,  including  area  code        (210)  249-4100
- --------------------------------------------------------------------------------

          (Former name or former address, if changed since last report.)

Check  the  appropriate  box  below  if  the  Form  8-K  filing  is  intended to
simultaneously  satisfy  the  filing  obligation  of  the  registrant
under  any  of  the  following  provisions (see General Instruction A.2. below):

[   ]  Written  communications pursuant to Rule 425 under the Securities Act (17
       CFR  230.425)

[   ]  Soliciting  material  pursuant  to Rule 14a-12 under the Exchange Act (17
       CFR  240.14a-12)

[   ]  Pre-commencement  communications  pursuant  to  Rule  14d-2(b)  under the
       Exchange  Act  (17  CFR  240.14d-2(b))

[   ]  Pre-commencement  communications  pursuant  to  Rule  13e-4(c)  under the
       Exchange  Act  (17  CFR  240.13e-4(c))

<PAGE>

Item  3.02  Unregistered  Sales  of  Equity  Securities.

On  January  18,  2007,  we  sold 3,000,000 shares of restricted common stock to
Robert  D. Evans, an individual investor, for a total offering price of $255,000
under  a Stock Purchase Agreement. Mr. Evans is an existing stockholder and also
invested  in  our common stock through a private placement in November 2001. The
shares  were  sold  in  accordance  with  Rule  506  of  Regulation  D under the
Securities  Act  of  1933  (as  amended)  in  that:

- -    the sales  were  made  to  an  accredited investor, as defined in Rule 501;

- -    we gave  the purchaser the opportunity to ask questions and receive answers
     concerning  the  terms  and  conditions  of  the offering and to obtain any
     additional  information  which  we  possessed  or  could  acquire  without
     unreasonable  effort or expense that is necessary to verify the accuracy of
     information  furnished;

- -    at a reasonable  time  prior  to  the  sale  of  securities, we advised the
     purchaser  of  the  limitations  on  resale in the manner contained in Rule
     502(d)2;

- -    neither  we  nor any person acting on our behalf sold the securities by any
     form  of  general  solicitation  or  general  advertising;  and

- -    we exercised reasonable care to assure that the purchaser of the securities
     is  not  an  underwriter  within  the  meaning  of  Section 2(a)(11) of the
     Securities  Act  of  1933  in  compliance  with  Rule  502(d).

This  report  contains  forward-looking  statements  that  involve  risks  and
uncertainties. We generally use words such as "believe," "may," "could," "will,"
"intend,"  "expect,"  "anticipate,"  "plan," and similar expressions to identify
forward-looking  statements.  You  should  not  place  undue  reliance  on these
forward-looking  statements.  Our  actual  results  could differ materially from
those  anticipated  in the forward-looking statements for many reasons including
our  ability  to  implement  our  business plan, our ability to raise additional
funds and manage our substantial debts, consumer acceptance of our products, our
ability  to  broaden  our  customer  base,  and  other  risks  described  in our
reports  filed  with  the  Securities and Exchange Commission from time to time.
Although  we  believe  the  expectations  reflected  in  the  forward-looking
statements  are  reasonable,  they  relate  only  to  events  as  of the date on
which  the  statements  are  made,  and  our  future  results,  levels  of
activity,  performance  or  achievements  may not meet these expectations. We do
not  intend  to  update any of the  forward-looking statements after the date of
this  document to conform these statements  to  actual  results  or  to  changes
in  our  expectations,  except  as  required  by  law.

ITEM  9.01  Financial  Statements  and  Exhibits.

EXHIBIT  NO.     DOCUMENT  DESCRIPTION
- ------------     ---------------------

    10.1         Stock Purchase  Agreement  between  the  Company and Robert D.
                 Evans, dated January  18,  2007.

<PAGE>

                                    SIGNATURE

Pursuant  to  the  requirements  of  the  Securities  Exchange  Act of 1934, the
registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  hereunto  duly  authorized.

                           Payment Data Systems, Inc.
                                  (Registrant)

Date   January  23,  2007

                                                  /s/  Michael R.  Long
                                                  ---------------------
                                                        (Signature)
                                                  Michael  R.  Long
                                                  Chief  Executive  Officer  and
                                                  Chief  Financial  Officer



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>ex101.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
Exhibit  10.1

                            STOCK PURCHASE AGREEMENT
                            ------------------------


     THIS  STOCK  PURCHASE  AGREEMENT (the "Agreement") is entered into the 18th
day  of  January  2007,  and  supersedes any and all other agreements whether in
writing  or  orally  communicated,  by  and  among  Payment  Data  Systems, Inc.
(hereinafter  referred to as  "SELLER"), a Nevada corporation, and Mr. Robert D.
Evans  (hereinafter  referred  to  as  the  "PURCHASER");

WITNESSETH:

     WHEREAS,  the  PURCHASER  desires  to  purchase  3,000,000  shares  of  the
Seller's  common  stock,  par value $0.001, (the Shares), and the SELLER desires
to  sell  or  cause  to  be  sold  the Shares, upon the terms and subject to the
conditions  herein;  and

     WHEREAS,  the  parties  desire  that,  upon  the  terms  and subject to the
conditions  contained  herein,  the  PURCHASER  shall  pay  $255,000  to  the
SELLER,  (the  "Purchase  Price")  in  exchange  for  the  Shares.

NOW,  THEREFORE,  in  consideration  of  the  mutual  covenants  and  agreements
contained  in  this  Agreement,  and in order to consummate the purchase and the
sale  of  the  Shares,  it  is  hereby  agreed  as  follows:

     1.     CLOSING  AND  PURCHASE  PRICE.

     A.     PROCEDURE  FOR CLOSING.  The Closing of the purchase and sale of the
Shares  will  be held at the SELLER'S offices on January 19, 2007 at 3:00 pm EST
(the  "Closing")  or  such  other place, date and time as the parties hereto may
otherwise  agree.

     B.     PURCHASE  AND  SALE  OF  PAYMENT  DATA  SYSTEMS  STOCK.  At Closing,
PURCHASER  agrees  to  purchase the Shares from SELLER and SELLER agrees to sell
the  Shares  to  PURCHASER,  for  the  Purchase  Price.

     C.      AMOUNT  AND  PAYMENT  OF  PURCHASE PRICE.  The Purchase Price shall
consist  of  $255,000,  or  $0.085  per share of common stock, to be paid to the
SELLER  by  the  PURCHASER  in  readily  available  funds.

     2.     REPRESENTATIONS  AND  WARRANTIES  OF  SELLER.  SELLER  hereby
warrants  and  represents:

     A.     SELLER  is  duly  organized,  validly  existing and in good standing
under  the  laws of the state of Nevada, and has the corporate power and  lawful
authority  to  own,  lease  and  operate  its  assets,  properties, and business
and  to  carry  on  its  business  as  now  being  and  as heretofore conducted.

     B.     AUTHORITY  RELATIVE  TO  THIS AGREEMENT.  Except as otherwise stated
herein, the  SELLER  has  full power and authority to execute this Agreement and
carry  out  the  transactions  contemplated  by  it  and  no  further  action is
necessary  by  the  SELLER  to  make  this  Agreement  valid  and  binding  upon
SELLER  and enforceable  against  him in accordance with the terms hereof, or to
carry  out  the  actions  contemplated  hereby.  The  execution,  delivery  and
performance  of  this  Agreement  by  the  SELLER  will  not:

     (i)     constitute  a  breach  or  a  violation  of  SELLER'S  Articles  of
Incorporation,  By-Laws,  or  of  any  law, agreement, indenture, deed of trust,
mortgage, loan agreement or other instrument to which it is a party, or by which
it  is  bound;

     (ii)     constitute  a  violation of any order, judgment or decree to which
it  is  a  party  or  by  which  its  assets  or  properties  are  bound  or
affected;  or

     (iii)     result  in  the  creation  of  any  lien,  charge  or encumbrance
upon  its  assets  or  properties,  except  as  stated  herein.

     C.     OWNERSHIP.  All  of  the  Shares  have been duly authorized, validly
issued  and  are  fully  paid  and  non-assessable,  and  were  not  issued  in
violation  of  the terms of any agreement or other understanding legally binding
upon  SELLER,  and  were  issued  in  compliance  with  all  applicable  laws
and  regulations.

     D.     CONSENT.  SELLER  has  obtained  written  consent  to  enter  this
Agreement  from  SELLER's  existing  lender  holding  a  right of first refusal.

     E.       FULL  DISCLOSURE.  Now  and  as  of  the  date  of  Closing,  no
representation  or  warranty  of SELLER contained in this Agreement, and, to the
best  knowledge  of  SELLER  (or  any  agents  of  SELLER), no document or other
paper  furnished  by or on behalf  of SELLER to PURCHASER (or any of its agents)
pursuant  to  this  Agreement  or  in  connection  with  the  transaction
contemplated  hereby,  taken  as  a whole, contains  an  untrue  statement  of a
material  fact  or omits to state a material fact  required to be stated therein
or necessary to make the statements made, in the  context  in  which  made,  not
false  or  misleading.

     3.     REPRESENTATIONS  AND  WARRANTIES  OF  THE  PURCHASER.  PURCHASER
hereby  warrants,  represents  and  agrees  that:

     A.      PURCHASER  is  an  accredited  investor, which is defined, in part,
pursuant  to  Rule  501  of Regulation D promulgated under the Securities Act of
1933  ("Regulation  D"),  as  follows:

"Any  natural  person  whose  individual net worth, or joint net worth with that
person's  spouse,  at  the  time of his purchase exceeds $1,000,000; Any natural
person  who  had  an  individual income in excess of $200,000 in each of the two
most  recent  years,  or  joint  income  with  that person's spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching the
same  income  level  in  the  current  year."

     B.     AUTHORITY  RELATIVE  TO  THIS  AGREEMENT  AND  ANCILLARY  DOCUMENTS.
Except as otherwise stated herein, the PURCHASER has full power and authority to
execute  this  Agreement, and carry out the transactions contemplated hereby and
thereby  and  no  further  action  is  necessary  by  the PURCHASER to make this
Agreement  valid  and  binding  upon  PURCHASER  and  enforceable  against it in
accordance  with  the  terms  hereof,  or  to carry out the actions contemplated
hereby  and  thereby.  The execution, delivery and performance of this Agreement
by  the  PURCHASER  will  not:

     (i)     constitute  a  breach  or  a  violation  of  any  law,  agreement,
indenture,  deed  of  trust,  mortgage,  loan  agreement  or other instrument to
which  he  is  a  party,  or  by  which  he  is  bound;

     (ii)     constitute  a  violation of any order, judgment or decree to which
he  is  a  party  or  by  which  his  assets  or  properties  are  bound  or
affected;  or

     (iii)     result  in  the  creation  of  any  lien,  charge  or encumbrance
upon  his  assets  or  properties  except  as  stated  herein.

     C.     NO  REGISTRATION.  PURCHASER  warrants  that  it  is  acquiring  the
Shares  for  investment and for PURCHASER'S own account and not  as a nominee or
agent  for  any  other  person and with no present intention of distributing  or
reselling  such  shares.  PURCHASER  understands  (1)  that  the Shares have not
been  registered  for sale under the Securities  Act  or  any  state  securities
or  "blue-sky"  laws  in  reliance  upon  exemptions therefrom, which exemptions
depend  upon,  among  other  things,  the bona fide  nature  of  the  investment
intent  of  PURCHASER  as  expressed herein, (2) that such  securities  must  be
held  indefinitely  and  not  sold  until such shares are registered  under  the
Securities  Act  and  any  applicable  state  securities  or  "blue-sky"  laws,
unless  an  exemption  from  such  registration  is  available.

     D.      INFORMATION ON SELLER. PURCHASER has been furnished with or has had
access  at  the  EDGAR  Website of the Securities and Exchange Commission to the
SELLER's  Form  10-KSB  for  the  year  ended December 31, 2005 and all periodic
reports  filed  with the Commission thereafter, but not later than five business
days  before  the Closing.  In addition, the PURCHASER has had an opportunity to
talk  with  Management of the SELLER and has received in writing from the SELLER
such  other information concerning its operations, financial condition and other
matters  as  the  PURCHASER  has  requested in writing to the extent required by
Regulation  D,  and  considered  all  factors  the  PURCHASER  deems material in
deciding  on  the  advisability  of  investing  in  the  Shares.

    E.           COMMON  STOCK  LEGEND.  The  Shares shall bear the following of
similar  legend:

"THE  SHARES  REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES  ACT  OF 1933, AS AMENDED.  THESE SHARES MAY NOT BE SOLD, OFFERED FOR
SALE,  PLEDGED  OR  HYPOTHECATED  IN  THE  ABSENCE  OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION  OF  COUNSEL  REASONABLY SATISFACTORY TO PAYMENT DATA SYSTEMS, INC. THAT
SUCH  REGISTRATION  IS  NOT  REQUIRED."

    F.  COMMUNICATION  OF  OFFER.  The  offer  to  sell  the Shares was directly
communicated  to  the  PURCHASER  by  the  SELLER.  At no time was the PURCHASER
presented with or solicited by any leaflet, newspaper or magazine article, radio
or  television  advertisement,  or  any  other  form  of  general advertising or
solicited  or  invited  to  attend  a  promotional  meeting  otherwise  than  in
connection  and  concurrently  with  such  communicated  offer.

    G.       NO  GOVERNMENT  REVIEW.  The  PURCHASER  understands that no United
States  federal  or  state  agency or any other governmental or state agency has
passed  on  or  made  recommendations  or  endorsement  of  the  Shares  or  the
suitability  of  the  investment  in the Shares nor have such authorities passed
upon  or  endorsed  the  merits  of  the  offering  of  the  Shares.

    H.       FULL  DISCLOSURE.  Now  and  as  of  the  date  of  Closing,  no
representation or warranty of PURCHASER contained in this Agreement, and, to the
best  knowledge  of  PURCHASER  (or  any  agents  of  PURCHASER), no document or
other  paper  furnished  by  or on behalf  of PURCHASER to SELLER (or any of its
agents)  pursuant  to  this  Agreement or in  connection  with  the  transaction
contemplated  hereby,  taken  as  a whole, contains  an  untrue  statement  of a
material  fact  or omits to state a material fact  required to be stated therein
or necessary to make the statements made, in the  context  in  which  made,  not
false  or  misleading.

     4.     EXPENSES.  Each  of  the  parties  hereto  shall  pay  its  own
expenses  in  connection  with  this  Agreement  and  the  transactions
contemplated  hereby, including  the  fees  and  expenses  of  its  counsel  and
other  experts.

     5.     CLOSING  DELIVERIES.  At  the  Closing,  the  deliveries hereinafter
specified shall be made by the respective parties hereto, in order to consummate
the  transactions  contemplated  hereby.

     A.     DELIVERIES  BY  SELLER.  SELLER  shall  deliver  or  cause  to  be
delivered  soon  as  reasonably  practical  to  PURCHASER,  stock  certificates,
and  any  and  all  other  instruments  of  conveyance  and  transfer  as
required  by  Section  1  of  this  Agreement.

     B.     DELIVERIES  BY  PURCHASER.  PURCHASER  shall deliver or caused to be
delivered  to  SELLER, the  Purchase  Price  of  this  Agreement;  and  any  and
all  other instruments  of  conveyance  and  transfer  as  required by Section 1
of  this  Agreement.

     6.     CONSUMMATION  OF  AGREEMENT.  PURCHASER  and  SELLER shall use their
best  efforts  to  perform  and  fulfill  all  conditions  and obligations to be
performed  and  fulfilled by them under this Agreement, and SELLER shall use his
best  efforts  to  further ensure that to the extent within SELLER'S control, no
breach  of any of SELLER'S representations, warranties, and agreements hereunder
or contemplated hereby occurs or exists on or before Closing to the end that the
transactions  contemplated  by  this  Agreement  shall  be  fully  carried  out.

     7.     FURTHER  ASSURANCES.  Each  of the parties hereto shall execute such
documents, further instruments and other papers and take such further actions as
may  be  reasonably required or desirable to carry out the provisions hereof and
the  transactions  contemplated  hereby.

     8.     GENERAL.

     A.     SURVIVAL  OF REPRESENTATIONS AND WARRANTIES.  Each of the parties to
this  Agreement  covenants  and  agrees  that  its  respective  representations,
warranties,  covenants  and  statements  and  agreements  contained  in  this
Agreement  and  the  exhibits  hereto,  and  in  any  documents  delivered  in
connection herewith, shall survive  the Closing indefinitely.  Except agreements
between  the  PURCHASER  and  SELLER,  and  as  set forth in this Agreement, any
exhibits  hereto  or  in  the  documents  and  papers  delivered  in  connection
herewith,  there  are  no  other  agreements,  representations,  warranties  or
covenants  by  or  among  the  parties  hereto  with  respect  to  the  subject
matter  hereof.

     B.     ENTIRE  AGREEMENT.  This  Agreement  (including  all  documents  and
papers delivered  pursuant  hereto  and  any  written amendments hereof executed
by  the  parties  hereto)  constitutes  the  entire  agreement  and  supersedes
all  prior  agreements and understandings, oral and written, between the parties
hereto  with  respect  to  the  subject  matter  hereof.

     C.     SECTIONS  AND  OTHER  HEADINGS.  The  section  and  other  headings
contained in this Agreement are for reference purposes only and shall not affect
the  meaning  or  interpretation  of  this  Agreement.

     D.     GOVERNING  LAW.  This  Agreement  and  all transactions contemplated
hereby, shall be governed by, construed and enforced in accordance with the laws
of  the  State  of  Nevada  without  regard  to its conflict of laws provisions.
In  the event that litigation  results  from  or  arises  out  of this Agreement
or the performance thereof,  the  parties  agree  to  reimburse  the  prevailing
party's  reasonable attorney's  fees,  court  costs,  and  all  other  expenses,
whether  or  not  taxable  by  the  court as costs,  in  addition  to  any other
relief  to  which,  the  prevailing  party  may  be  entitled.

     E.     CONTRACTUAL  PROCEDURES.  Unless  specifically  disallowed  by  law,
should  litigation  arise  hereunder,  service  of  process  therefore,  may  be
obtained  through  certified  mail, return receipt requested; the parties hereto
waiving any and  all  rights  they  may  have  to  object to the method by which
service  was  perfected.

     F.     AMENDMENT  AND  WAIVER.  The  parties  may by mutual agreement amend
this  Agreement  in  any  respect,  and  any  party,  as  to such party, may (a)
extend  the  time  for  the  performance  of any of the obligations of any other
party,  and  (b)  waive  (i)  any  inaccuracies  in  representations  by  any
other  party,  (ii)  compliance  by  any  other party with any of the agreements
contained  herein  and  performance  of any obligations by such other party, and
(iii) the fulfillment of any  condition  that is precedent to the performance by
such party of any of its obligations under this Agreement.  To be effective, any
such  amendment  or  waiver  must  be  in  writing  and  be  signed by the party
against  whom  enforcement  of  the  same  is  sought.

     G.     COUNTERPARTS.  This  Agreement  may  be  executed  in  one  or  more
counterparts,  each  of whom shall for all purposes are deemed to be an original
and  all  of  which  shall  constitute  one  instrument.

     H.     ADVICE  OF COUNSEL.  EACH PARTY ACKNOWLEDGES THAT, IN EXECUTING THIS
AGREEMENT,  SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT
LEGAL  COUNSEL,  AND  HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF
THIS  AGREEMENT.


IN  WITNESS  WHEREOF,  this  Agreement  has been executed by each of the parties
hereto  all  on  the  date  first  above  written.



PURCHASER:

Robert  D.  Evans

By:  /s/  Robert  D.  Evans
     ----------------------
     Robert  D.  Evans


SELLER:

Payment  Data  Systems,  Inc.,  a  Nevada  corporation

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


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
