Payment Data Systems Inc (PYDS)

[StockTrader1965]

Lebed.biz Alert May 11th 2008 Part III

The idea for a credit card was originally imagined by Edward Bellamy in 1888... writer of the book Looking Backward, which sold more than 1 million copies.

He envisioned that a cashless society, using credit cards for purchases, would exist at the end of the twentieth century.

He predicted we would live in a world where, "A credit corresponding to his share of the annual product of the nation is given to every citizen on the public books at the beginning of each year, and a credit card issued him with which he procures at the public storehouses, found in every community, whatever he desires whenever he desires it."

However, what he imagined would actually be known today as a debit card.

A credit card, as we know it today, wasn't invented until 1956 by California's Bank of America. It did not require prepayment but offered the bank's own credit, instantly, for purchases at a great variety of participating businesses.

In 1977 is when Visa was adopted internationally and became the first credit card to be recognized worldwide.

I think the world would've been better off if credit cards never existed and we only used debit cards.

We now have close to $1 trillion in credit card debt and 4.53% of credit card balances are currently delinquent.

A 4.53% delinquency rate may not sound like a lot, but believe me... it is about to get MUCH worse.

1/2 of the people who are paying back their credit card debt... are only making the minimum monthly payments. Many of these people are paying outrageous 20% interest rates. Their debts are compounding quickly which will lead to many of them defaulting very soon too.

After the delinquency rate passes 10%... the market for credit card debt will dry up quickly... just like the home mortgage market.

You will no longer get a hundred emails with credit card offers each month. You will no longer be asked to apply for a credit card at every sporting event you attend. You will no longer be asked to apply for a store credit card when checking out at the mall.

Even people who are credit worthy and responsible with their money will find it harder to obtain a credit card and will receive lower spending limits.

These people will switch to debit cards and Payment Data Systems, Inc. (PYDS) is one of only four companies certified by Visa as a Compliant Service Provider with the ability to produce private label debit cards and prepaid gift cards. You can verify this for yourself by going here: http://usa.visa.com/download/merchants/cisp_list_of_cisp_compliant_service_providers.pdf

PYDS's certification with Visa was only obtained recently and judging by PYDS's market cap of only $3.7MM... it is obvious that very few people in the investment community have noticed yet.

PYDS previously obtained a similar certification with MasterCard and has already launched celebrity branded MasterCard debit cards featuring Natalie Gulbis and Carmen Electra.

Not only is PYDS going to capitalize on the upcoming trend of people switching from credit cards to debit cards... but PYDS is also beginning to capitalize on the "unbanked population".

There are millions of people in the U.S. who don't even have bank accounts... many of them are immigrants. PYDS makes it possible for "unbanked" consumers to receive their payroll on their own stored value debit card and use the debit card to pay bills and withdraw cash from ATM's.

PYDS has their own online bill payment portal Billx.com which allows you to pay all of your bills online in one convenient place. PYDS will soon be introducing their own branded Billx Prepaid MasterCard for both adults and teens which will be integrated with the Billx bill payment processing system. Consumers will be able to load and unload in real-time their Billx Prepaid MasterCards for both their personal use and their children’s use.

PYDS processed over $100 million worth of credit card transactions in 2007 which was up 65% over 2006!

This growth appears to be continuing in 2008! PYDS announced in March that their January processing dollar-volume increased 61% over a year ago and February continued this trend with credit card processing dollar-volume up 53%.

PYDS's 1Q results are due out this week! Unless March for some reason was a terrible month (which I doubt)... I believe PYDS will report HUGE 1Q results this week! What will especially make the results strong is the $750,000 in cash PYDS just received for the sale of a patent!

PYDS's current market cap of $3.7MM is just about as low as it gets for a revenue producing fully reporting company with NO DEBT!

Considering that PYDS is growing RAPIDLY and in one of the HOTTEST industries right now... I believe PYDS's upside potential at $0.046 is ASTRONOMICAL!

We could see PYDS start to TAKE OFF BIG this week!

Please do your own research and make your own investment decisions.
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My firm Lebed Biz LLC has been compensated by PYDS $20,000 cash for a one-month investor relations contract. We were previously compensated by PYDS a total of $50,000 cash for past investor relations contracts which have since expired. Never invest into a stock we discuss unless you can afford to lose your entire investment. For our full disclaimer go to: www.lebed.biz/disclaimer.htm

Jonathan Lebed
Lebed.biz
Staff