Exhibit 10.11
May 1, 2005
First Data Merchant Services Corporation
1307 Walt Whitman Road,
Melville, New York 11747
Attn: Anthony Lucatuorto

      Re:   Letter Agreement regarding Asset Purchase Agreement and Service
Agreement.

Dear Anthony:
     This Letter Agreement is with respect to the Asset Purchase Agreement dated
as of December 27, 2004 among iPayment, Inc. (“IPMT”), iPayment Acquisition Sub
LLC (along with IPMT, hereinafter referred to as the “Buyer”), First Data
Merchant Services Corporation (“FDMS”) and Unified Merchant Services (along with
FDMS, hereinafter referred to as the “Seller”) (the “Asset Purchase Agreement”),
and the Service Agreement dated December 27, 2004 between FDMS and IPMT (the
“Service Agreement”).
Pursuant to discussions to date, with respect to the Asset Purchase Agreement
and the Service Agreement, the parties agree as follows:

  1.   The Buyer will return to the Seller those Merchants listed on Schedule A
hereto (the “Returned Merchants”) effective as of May 1, 2005 (the “Effective
Date”). As of the Effective Date, ownership of the Returned Merchants shall
revert back to the Seller and any and all rights, liabilities, or obligations
transferred to the Buyer relating to such Returned Merchants shall transfer back
to the Seller.     2.   As of the Effective Date, the Seller shall not be
charged any fees for any activity whatsoever by the Returned Merchants pursuant
to the Service Agreement or any other agreement between the parties.     3.  
The parties agree that Section 4.4 of the Service Agreement is hereby replaced
with the following:

      “In Processing Year 1, Customer shall pay FDMS for processing services
sufficient to generate aggregate Processing Fees at least

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      equal to Nine Million dollars ($9,000,000) (the “Year 1 Minimum Processing
Fee”). In Processing Year 2, Customer shall pay FDMS for processing services
sufficient to generate aggregate Processing Fees at least equal to Seventy
Percent (70%) of the Year 1 Minimum Processing Fee. In each Processing Year
after Processing Year 2, Customer will require and shall pay FDMS for processing
services sufficient to generate aggregate Processing Fees at least equal to
seventy percent (70%) of the Processing Fees paid during the immediately
preceding Processing Year (the “Minimum Processing Fees”). FDMS shall calculate
the total Processing Fees paid by Customer in respect of Services performed
during each Processing Year (the “Total Annual Processing Fees”) within ninety
(90) days after the end of each Processing Year and will, after ten (10) days
written notice to Customer, draw upon Customer’s account pursuant to Section 4.5
of this Agreement for the amount, if any, by which the Year 1 Minimum Processing
Fees or the Minimum Processing Fees, as applicable, for the Processing Year
exceed the Total Annual Processing Fees for the Processing Year. For the
avoidance of doubt and based on economic assumptions material to each party
underlying this transaction, Customer and FDMS expressly agree that Customer
shall pay FDMS Processing Fees each Processing Year in an amount at least equal
to the Year 1 Minimum Processing Fee or the Minimum Processing Fees, as
applicable, until this Agreement is terminated by Customer solely pursuant to
the provisions of Section 9.2 of this Agreement or until FDMS terminates this
Agreement and invokes compensatory payments pursuant to Section 9.4 of this
Agreement.”

  4.   The parties agree that as of the Effective Date, Exhibit B to the Service
Agreement shall be amended to include a new Section I.(g) to read as follows: *
    5.   Except as agreed to herein, all terms of the Asset Purchase Agreement
and the Service Agreement shall remain in full force and effect. Any capitalized
terms included in this Letter Agreement that are not defined herein shall have
the meanings ascribed to them in the Asset Purchase Agreement or Service
Agreement, as applicable.

 

*   Omitted pursuant to a confidential treatment request. The confidential
portion has been filed separately with the SEC.

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        If you are in agreement with the above, we ask that you please sign
below as indicated.

         
 
  /s/ Carl Grimstad
 
Carl Grimstad, on behalf of    
 
  iPayment, Inc. and    
 
  iPayment Acquisition Sub LLC    

                  Acknowledged, accepted and agreed to by:            
 
        First Data Merchant Services Corporation       Unified Merchant Services
 
                         
By:
  /s/ Brian Seims       By:   /s/ Deanna Kosse
 
               
Its:
  Brian Seims       Its:   Deanna Kosse
Dated:
  10/26/05       Dated:   10/20/05

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Schedule A
*
 

*   Omitted pursuant to a confidential treatment request. The confidential
portion has been filed separately with the SEC.