iPayment Reports Second Quarter Financial Results

NASHVILLE, TN – iPayment, Inc. (NASDAQ: IPMT) today announced financial results for the second quarter and six months ended June 30, 2005. Revenues increased 102.7% to $181,138,000 for the quarter from $89,384,000 for the second quarter of 2004. Net income rose 36.1% to $7,729,000 for the second quarter of 2005 from $5,677,000 for the second quarter last year, while earnings per diluted share increased 34.4% to $0.43 from $0.32 for the second quarter of 2004. Results for the second quarter of 2005 include pre-tax expenses of $496,000 related to the previously announced work of the Special Committee of the Board of Directors to explore strategic alternatives. The Company’s results for the second quarter of 2005 were in-line with management’s expectations.

The Company’s revenue growth for the quarter reflected an increase in charge volume to $6.6 billion from $3.2 billion for the second quarter last year. At the end of the second quarter of 2005, iPayment, Inc. and its wholly-owned subsidiaries had 340 employees.

The Company has made the determination that during the pendency of the Special Committee process it will not provide financial guidance or hold a conference call to discuss its second quarter results.

iPayment, Inc. is a provider of credit and debit card-based payment processing services to over 135,000 small merchants across the United States. iPayment’s payment processing services enable merchants to process both traditional card-present, or “swipe,” transactions, as well as card-not-present transactions, including transactions over the internet or by mail, fax or telephone.