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): March 7, 2005


                         COMMISSION  FILE  NUMBER  000-30152

                       Payment  Data  Systems,  Inc.
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             (Exact  name  of  registrant  as  specified  in  its  charter)

         Nevada                                     98-0190072
-------------------------------             ---------------------------
(State  or  other  jurisdiction  of            (I.R.S.  Employer
 incorporation  or  organization)               identification  No.)

                      12500  San  Pedro,  Suite  120
                         San  Antonio,  TX  78216
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                     (Address  of  principal  executive  office)
                                   (Zip  Code)

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

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))

Item  2.02  Results  of  Operations  and  Financial  Condition.

On  March  7, 2005, Payment Data Systems, Inc. issued a press release announcing
the  Company's  earnings for the year ended December 31, 2004. The press release
is  attached  hereto  as  Exhibit  99.1  and  incorporated  herein by reference.

The  information  in this Form 8-K, including the exhibit, is being furnished to
the  Securities  and  Exchange  Commission  and  shall not be deemed "filed" for
purposes  of  Section  18 of the Securities Exchange Act of 1934, as amended, or
otherwise  subject  to  the  liabilities of that section, nor shall it be deemed
incorporated  by  reference  in  any filing under the Securities Act of 1933, as
amended.

Item  9.01.  Financial  Statements  and  Exhibits.

(c)     Exhibits.

99.1     Press  Release  of  Payment  Data  Systems,  Inc.  dated March 7, 2005.

SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the  Registrant  has  duly  caused this Report to be signed on its behalf by the
undersigned  thereunto  duly  authorized.

  Payment  Data  Systems,  Inc.

By:  /s/  Michael  R.  Long

---------------------------
Michael  R.  Long,  Chief  Executive  Officer  and
Chief  Financial  Officer

Dated:  March  7,  2005

                                  EXHIBIT INDEX


Exhibit
Number        Description
-------       ------------------------------------------------------------------
99.1          Press  Release  of Payment Data Systems, Inc. dated March 7, 2005.