FIRST AMENDMENT TO SERVICE AGREEMENT

This First Amendment to Service Agreement dated as of October 25, 2002(the "Effective Date") is between First Data Merchant Services Corporation("FDMS") and iPayment, Inc., formerly known as iPayment Holdings, Inc.("Customer"), and hereby amends the Service Agreement entered into between FDMSand Customer dated as of July 1, 2002 (the "Agreement").

RECITALS

WHEREAS, the parties entered into the Agreement in order to govern therelationship of the parties with respect to credit card settlement transactionsand sponsorship; and

WHEREAS, pursuant to Section 12.14 of the Agreement, the parties wish toamend section 9.2(b) of the Agreement extending the date that Customer has toterminate the Agreement from October 26, 2002 until November 30, 2002; and

WHEREAS, the parties wish to amend certain other sections of the Agreementto reflect the change in Section 9.2(b); and

WHEREAS, since the date of the Agreement, iPayment Holdings, Inc., aTennessee corporation, has become iPayment, Inc., a Delaware corporation; and

WHEREAS, the parties wish that the remaining terms of the Agreement remainthe same.

NOW, THEREFORE, in consideration of the foregoing premises and the mutualcovenants herein contained, the parties agree to amend the Agreement as follows:

1. Article 4, Section 4.1(b) shall be amended in its entirety to read as follows:

(b) In order for Customer to evaluate the Processing Fees to be charged under this Agreement effective October 1, 2002 as contemplated by Sections 4.1(a) and 9.2(b) herein, FDMS will prepare and provide to Customer two separate invoices for the Services provided during the months of July, August, September and October 2002. One invoice will show the amount of processing fees actually due and owing from Customer and billed under the BHAC Agreement, the Humboldt Agreement and the Merchant Processing Services portions of the FNP Agreement, and the other invoice will show the Processing Fees that would have been due and owing from Customer if they

had been billed under this Agreement. FDMS will deliver the invoices for October 2002 on or before November 21, 2002.

2. Article 9, Section 9.2(b) shall be amended in its entirety to read as follows:

(b) Notwithstanding anything contained herein, the parties agree that Customer will have the right, on or before November 30, 2002, to provide written notice to FDMS of its election to terminate this Agreement if Customer, in good faith, is not satisfied with the Processing Fees under this Agreement and to revert to each of the existing BHAC Service Agreement, Humboldt Agreement and FNP Agreement. Upon Customer's election to terminate this Agreement and revert to the BHAC Service Agreement, Humboldt Agreement and FNP Agreement, Customer agrees to return to FDMS any sign-up bonus<PAGE> or other compensation received by Customer specifically in exchange for entering into this Agreement, including the sign-up bonus described in Section 2.6. During such period ending November 30, 2002, the Affiliates of Customer, which were deemed Affiliates as of July 1, 2002, shall not, directly or indirectly, solicit, encourage, engage or participate in any discussions or negotiations with any other person or entity, including providing any information, with respect to any agreement for services similar to the Services being provided by FDMS under this Agreement, excluding discussions related to acquisitions by Customer of Merchant Accounts.

3. Article 12, Section 12.16 shall be amended in its entirety to read as follows:

Unless Customer makes the election to terminate this Agreement as provided in Section 9.2(b), the BHAC Service Agreement, the Humboldt Agreement and the Merchant Processing Services portions of the FNP Agreement are hereby terminated effective as of December 1, 2002.

4. As hereby amended and supplemented, the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to theAgreement as of the Effective Date above:

FIRST DATA MERCHANT SERVICES CORPORATION

By: /s/ Rick Learim ---------------------------------------Name: Rick Learim -------------------------------------Title: Vice President ------------------------------------

iPAYMENT, INC. (a Delaware corporation)(Formerly known as iPayment Holding, Inc.)

By: /s/ Joseph Jorling ---------------------------------------Name: Joseph Jorling -------------------------------------Title: C.O.O. ------------------------------------

This Sample Amendment to Contract can help you incorporate any changes to an existing agreement, quickly and painlessly. You'll also find tips on filling in the form

in the "Completing the Amendment" section below. (For more information on making changes to an agreement that's already in writing, see Nolo's article Amending an Existing Contract.)Amendment to Contract

1. This amendment (the "Amendment") is made by _________________ and _________________, parties to the agreement _________________ dated (the "Agreement").2. The Agreement is amended as follows:________________________________________________3. Except as set forth in this Amendment, the Agreement is unaffected and shall continue in full force and effect in accordance with its terms. If there is conflict between this amendment and the Agreement or any earlier amendment, the terms of this amendment will prevail. ____________________________By: __________________________Printed Name: _________________Title: ________________________Dated: _________________ ____________________________By: __________________________Printed Name: _________________Title: ________________________Dated: _________________ Completing the Amendment

Here are a few tips on how to complete the Sample Amendment and incorporate it into your contract:1. Introductory paragraph. Type your name or the name of your company and the other side's name (an individual or a company).2. Describe the amendment(s). Type in the amendments to the existing contract using one of the three methods: redlines and strikeouts, replacing an entire clause in its entirety, or simply describing the changes. For detailed information on these amendment methods, check out Nolo's article Amending an Existing Contract.3. The concluding paragraph. This paragraph (number three) should be included to guarantee that other than the amendment, the contract remains as it is written.4. Proofread and sign your amendment. Under the printed party names, each of you should sign and write in the date. Below, each should print his or her name and title, such as "Chief Operating Officer," or "general partner." You'll want to make sure the person signing the agreement has the authority to do so and, equally important, that you have fulfilled any signing or notice requirements included in the original agreement. Generally, agreements require the contracting parties to sign all amendments. However, in some cases -- for example corporate amendments or amendments to financial agreements -- other signatures or notices may be required.

5. Managing Amendments. Contracts may undergo multiple amendments, so it's usually a good idea to number each amendment -- for example "Amendment No. 1" or "First Amendment." In addition, amendments should be filed and maintained with the original agreement so that anyone viewing the file will know that the agreement has been amended.