Payment Data Systems Inc - Initial Statement of Beneficial Ownership (3)

FORM 3	UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 INITIAL STATEMENT OF BENEFICIAL OWNERSHIP OF SECURITIES	OMB APPROVAL OMB Number: 3235-0104 Expires: January 31, 2008 Estimated average burden hours per response... 0.5
	Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

1. Name and Address of Reporting Person ^*

Keller Kenneth Wayne

2. Date of Event Requiring Statement (MM/DD/YYYY) 1/7/2008

3. Issuer Name and Ticker or Trading Symbol

PAYMENT DATA SYSTEMS INC [PYDS]

(Last) (First) (Middle)

12500 SAN PEDRO STE 120

4. Relationship of Reporting Person(s) to Issuer (Check all applicable)

_____ Director _____ 10% Owner
___ X ___ Officer (give title below) _____ Other (specify below)
VP & Chief Technology Officer /

(Street)

SAN ANTONIO, TX 78216

(City) (State) (Zip)

5. If Amendment, Date Original Filed (MM/DD/YYYY)

6. Individual or Joint/Group Filing (Check Applicable Line)

_ X _ Form filed by One Reporting Person
___ Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Beneficially Owned
1.Title of Security (Instr. 4)	2. Amount of Securities Beneficially Owned (Instr. 4)	3. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)	4. Nature of Indirect Beneficial Ownership (Instr. 5)
Common Stock	1082490	D

*Table II - Derivative Securities Beneficially Owned ( e.g.* , puts, calls, warrants, options, convertible securities)**
1. Title of Derivate Security (Instr. 4)	2. Date Exercisable and Expiration Date (MM/DD/YYYY)		3. Title and Amount of Securities Underlying Derivative Security (Instr. 4)		4. Conversion or Exercise Price of Derivative Security	5. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 5)	6. Nature of Indirect Beneficial Ownership (Instr. 5)
1. Title of Derivate Security (Instr. 4)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares	4. Conversion or Exercise Price of Derivative Security		6. Nature of Indirect Beneficial Ownership (Instr. 5)
Employee Stock Option (right to buy)	6/10/2006	6/10/2013	Common Stock	85000	$0.085	D
Employee Stock Option (right to buy)	6/30/2004	12/30/2013	Common Stock	90000	$0.14	D
Employee Stock Option (right to buy)	12/29/2005	12/29/2015	Common Stock	102492	$0.082	D

Explanation of Responses:

Reporting Owners
Reporting Owner Name / Address	Relationships
Reporting Owner Name / Address	Director	10% Owner	Officer	Other
Keller Kenneth Wayne 12500 SAN PEDRO STE 120 SAN ANTONIO, TX 78216			VP & Chief Technology Officer

Signatures
Kenneth Keller		1/11/2008
^** Signature of Reporting Person		Date

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
*	If the form is filed by more than one reporting person, see Instruction 5(b)(v).
**	Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
Note:	File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.
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