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                                                                    EXHIBIT 10.3


                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 14th
day of January 2002 (the "Effective Date"), by and between S1 Corporation, a
Delaware corporation (the "Company"), and Peter Dunning, an individual (the
"Executive").

         WHEREAS, the Executive is currently employed as the Executive Vice
President & General Manager Americas of the Company;

         WHEREAS, the Company and the Executive desire to enter into this
Employment Agreement to set out the terms and conditions for the employment
relationship of the Executive with the Company from and after the Effective
Date; and

         WHEREAS, the board of directors of the Company (the "Board") has
approved and authorized the Company's execution, delivery and performance of
this Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:

         1.       Employment Agreement. On the terms and conditions set forth in
this Agreement, the Company agrees to employ the Executive and the Executive
agrees to be employed by the Company for the Employment Period set forth in
Section 2 hereof and in the position and with the duties set forth in Section 3
hereof. Terms used herein with initial capitalization not otherwise defined are
defined in Section 20 below.

         2.       Term. The initial term of employment under this Agreement
shall be for a three-year period commencing on January 14, 2002 (the "Employment
Date") (the "Initial Term"). The term of employment shall be automatically
renewed for an additional consecutive 12-month period (the "Extended Term") as
of the first and every subsequent anniversary of the Effective Date, unless and
until either party provides written notice to the other party in accordance with
Section 10 hereof not less than 90 days before such anniversary date that such
party is terminating the term of employment under this Agreement
("Non-Renewal"), which termination shall be effective as of the end of such
Initial Term or Extended Term, as the case may be, or until such term of
employment is otherwise sooner terminated as hereinafter set forth. Such Initial
Term and all such Extended
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Terms are collectively referred to herein as the "Employment Period." A notice
of Non-Renewal given by either party to this Agreement shall not be deemed a
termination of the Executive's employment for purposes of Section 9 of this
Agreement. The Company's obligations under Section 9 hereof shall survive the
expiration or termination of the Employment Period.

         3.       Position and Duties. The Executive shall serve as the
Executive Vice President & General Manager Americas of the Company during the
Employment Period. As the Executive Vice President & General Manager Americas,
the Executive shall render executive, policy and other management services to
the Company of the type customarily performed by persons serving in such
capacity. The Executive shall report to the Chief Executive Officer of the
Company ("CEO") unless otherwise determined by the Company. The Executive shall
also perform such other duties with the Company and with any Subsidiary as the
Chief Executive Officer of the Company or the Board may from time to time
reasonably determine and assign to the Executive. The Executive shall devote the
Executive's reasonable best efforts and substantially full business time to the
performance of the Executive's duties and the advancement of the business and
affairs of the Company. The Executive agrees that during the Employment Period
he or she will not be entitled to additional compensation for serving as a
member of the board of directors of the Company or any Subsidiary if he or she
is elected to serve thereon. Upon prior written notice to and approval of the
CEO, which approval will not be unreasonably withheld, the Executive may also
serve on boards of directors or trustees of other companies and organizations,
as long as such service does not materially interfere with the performance of
his duties hereunder.

         4.       Place of Performance. In connection with the Executive's
employment by the Company, the Executive shall be based at the offices of the
Company in Atlanta, Georgia, except as otherwise agreed by the Executive and the
Company and except for reasonable travel on Company business.

         5.       Compensation and Benefits; Stock Options.

                  (a)      Base Salary. During the Employment Period, the
Company shall pay to the Executive an annual base salary (the "Base Salary") at
the rate of $ 360,000 per year. The Base Salary shall be reviewed no less
frequently than annually and may be increased at the discretion of the Company.
The Base Salary shall be payable semi-monthly or in such other installments as
shall be consistent with the Company's payroll procedures.

                  (b)      Annual Bonus. The Executive will receive an annual
bonus, payable no later than the end of the first fiscal quarter of each
calendar year during the Employment Period (pro-rated for any period that is
less than 12 months) of up to $ 250,000 at plan and an additional $ 50,000 at
105% of plan for such calendar year, based on the attainment of specific Company
performance


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targets as may be agreed upon by the Executive and the Company annually. The
annual bonus will be designed so that upon meeting specified minimum thresholds,
partial attainment of such targets will result in the payment of a
correspondingly reduced bonus amount. A $50,000 non-recoverable draw against the
annual bonus will be paid to the Executive in twelve equal monthly installments
during the Executive's first year of employment with the first payment included
in his first paycheck with the Company. The Executive and the Chief Executive
Officer shall agree on the Executive's performance targets for the first year of
the Initial Term within thirty (30) days after Executive's employment with the
Company. Thereafter, the Executive and the Chief Executive Officer shall agree
to annual performance targets within forty-five (45) days prior to the start of
each calendar year.

                  (c)      Benefits. During the Employment Period, the Executive
will be entitled to participate in any retirement, deferred compensation, fringe
benefit or welfare benefit plan of the Company (on the same terms as provided to
senior executive officers of the Company), including any plan providing for
employee stock purchases, pension or retirement income, retirement savings,
employee stock ownership, deferred compensation or medical, prescription,
dental, disability, employee life, group life, accidental death or travel
accident insurance benefits that the Company may adopt for the benefit of
executive employees, in accordance with the terms of such plan. Nothing in this
Agreement shall restrict the right of the Company to change insurance carriers
and to adopt, amend, terminate or modify employee benefit plans and arrangements
at any time and without the consent of the Executive.

                  (d)      Stock Options. The Company may grant options to
purchase common stock of the Company to the Executive in accordance with the
terms of the Company's stock option plans.

                  (e)      Vacation; Holidays. The Executive shall be entitled
to all public holidays observed by the Company and to annual vacation for such
number of days as may be determined by the Company, and otherwise in accordance
with the applicable vacation policies for senior executives of the Company,
which shall be taken at a reasonable time or times.

                  (f)      Withholding Taxes and Other Deductions. To the extent
required by law, the Company shall withhold from any payments due Executive
under this Agreement any applicable federal, state or local taxes and such other
deductions as are prescribed by law or Company policy or are otherwise
authorized by the Executive.

         6.       Expenses. The Executive is expected and is authorized to incur
reasonable expenses in the performance of his or her duties hereunder. The


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Company shall reimburse the Executive for all such expenses promptly upon
periodic presentation by the Executive of an itemized account, including
reasonable substantiation, of such expenses.

         7.       Confidentiality, Non-Disclosure and Non-Competition Agreement.

                  Concurrently with the execution of this Agreement, the parties
are entering into a Confidentiality, Non-Disclosure and Non-Competition
Agreement (the "Related Agreement").

         8.       Termination of Employment.

                  (a)      Permitted Terminations. The Executive's employment
hereunder may be terminated during the Employment Period under the following
circumstances:

                           (i)      Death. The Executive's employment hereunder
shall terminate upon the Executive's death;

                           (ii)     By the Company. The Company may terminate
the Executive's employment:

                                    (A)      If the Executive shall have been
substantially unable to perform the Executive's material duties hereunder by
reason of illness, physical or mental disability or other similar incapacity,
which inability shall continue for three consecutive months (provided, that
until such termination, the Executive shall continue to receive his or her
compensation and benefits hereunder, reduced by any benefits payable to him or
her under any disability insurance policy or plan applicable to him or her); or

                                    (B)      For Cause;

                           (iii)    By the Executive. The Executive may
terminate his or her employment for any reason or for no reason.

                  (b)      Termination. Any termination of the Executive's
employment by the Company or the Executive (other than because of the
Executive's death) shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon, if any, and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. Termination of the Executive's employment shall take
effect on the Date of Termination.


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         9.       Compensation Upon Termination or Change in Control.

                  (a)      Death. If the Executive's employment is terminated
during the Employment Period as a result of the Executive's death, the Company
shall pay to the Executive's estate, or as may be directed by the legal
representatives of such estate, the Executive's Base Salary due through the Date
of Termination, a pro rata portion of the annual bonus that would have been
payable for the calendar year of termination if the Executive's employment had
not terminated (calculated based upon actual results through the Date of
Termination and based upon budget for the remainder of the period and pro rated
for the portion of the year during which the Executive was employed), and all
other unpaid amounts, if any, to which the Executive is entitled as of the Date
of Termination, at the time such payments are due. The Company shall have no
further obligation to the Executive under this Agreement.

                  (b)      Disability. If the Company terminates the Executive's
employment during the Employment Period because of the Executive's disability
pursuant to Section 8(a)(ii)(A) hereof, the Company shall pay the Executive the
Executive's Base Salary due through the Date of Termination, a pro rata portion
of the annual bonus that would have been payable for the calendar year of
termination if the Executive's employment had not terminated (calculated based
upon actual results through the Date of Termination and based upon budget for
the remainder of the period and pro rated for the portion of the year during
which the Executive was employed and all other unpaid amounts, if any, to which
the Executive is entitled as of the Date of Termination, at the time such
payments are due, and the Company shall have no further obligations to the
Executive under this Agreement; provided, that payments so made to the Executive
with respect to any period that the Executive is substantially unable to perform
the Executive's material duties hereunder by reason of illness, physical or
mental illness or other similar incapacity shall be reduced by the sum of the
amounts, if any, payable to the Executive by reason of such disability, at or
prior to the time of any such payment, under any disability insurance policy or
benefit plan and which amounts have not previously been applied to reduce any
such payment.

                  (c)      Termination by the Company for Cause or by the
Executive without Good Reason. If, during the Employment Period, the Company
terminates the Executive's employment for Cause pursuant to Section 8(a)(ii)(B)
hereof or the Executive terminates his or her employment without Good Reason,
the Company shall pay the Executive the Executive's Base Salary due through the
Date of Termination, and all other unpaid amounts, if any, to which the
Executive is entitled as of the Date of Termination, at the time such payments
are due, and the Company shall have no further obligations to the Executive
under this Agreement. In the event that the Company intends to terminate the
Executive for Cause, the Executive shall have a reasonable opportunity, together
with his or her counsel, to be heard before the Board of Directors of the
Company before such termination.


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                  (d)      Termination by the Company without Cause or by the
Executive with Good Reason. If the Company terminates the Executive's employment
during the Employment Period other than for Cause, disability or death pursuant
to Section 8(a)(i) or (ii) hereof or the Executive terminates employment
hereunder with Good Reason, the Company shall (i) pay the Executive the
Executive's Base Salary due through the Date of Termination, a pro rata portion
of the annual bonus that would have been payable for the calendar year of
termination if the Executive's employment had not terminated (calculated based
upon actual results through the Date of Termination and based upon budget for
the remainder of the period and pro rated for the portion of the year during
which the Executive was employed) and all other unpaid amounts, if any, to which
the Executive is entitled as of the Date of Termination, at the time such
payments are due, (ii) pay, during the 12-month period commencing on the Date of
Termination (the "Severance Period"), to the Executive an aggregate amount equal
to Executive's Base Salary, payable in equal installments on the Company's
regular salary payment dates, (iii) pay, during the Severance Period an annual
bonus equal to the average annual bonus paid by the Company to the Executive
during the last 36 months of the Executive's employment preceding the Date of
Termination, which bonus shall be paid at the time that such bonus would have
become payable if the Executive had continued to be employed by the Company
during the Severance Period, (iv) shall continue in effect during the Severance
Period the employee benefits provided to the Executive under Section 5(c) hereof
immediately before the Date of Termination (except to that, to the extent such
benefits are provided pursuant to a qualified plan under Section 401(a) of the
Code, the Company shall provide a substantially equivalent nonqualified benefit)
and (v) shall cause all of the outstanding options then held by the Executive to
purchase stock of the Company to be: (A) fully vested and exercisable if such
termination occurs within two years after a Change in Control (or before a
Change in Control has occurred, but after the Company has commenced negotiations
of a transaction that results in a Change in Control) or (B) if (A) does not
apply, vested and exercisable to the same extent that such options would have
been vested and exercisable if the Executive had continued to be employed by the
Company during the 24 months immediately following the Date of Termination (the
"Vesting Period"), plus additional pro rata vesting with respect to the period
between the last vesting date under such option during the Vesting Period and
the end of the Vesting Period, in accordance with Schedule A attached to this
Agreement (and such additional vesting, if any, shall be effective as of the
Date of Termination); provided, that no notice of Non-Renewal shall be deemed to
be a termination of the Executive's employment for such purposes unless
otherwise expressly provided in such notice of Non-Renewal. As a condition
precedent to the receipt of the foregoing payments and benefits, if requested by
the Company, the Executive shall enter into an agreement with the Company
confirming the Company's right to continued performance by the Executive of the
Executive's obligations under the Related Agreement during the period following
termination of the Executive's employment.


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         As a condition precedent to the receipt of the foregoing payments and
benefits, if requested by the Company, the Executive shall enter into an
agreement with the Company confirming the Company's right to continued
performance by the Executive of the Executive's obligations under the Related
Agreement during the period following termination of the Executive's employment.

                  (e)      Change in Control. If a Change in Control occurs
during the Employment Period, and the Executive holds one or more outstanding
options to purchase stock of the Company that do not, by the terms of such
options, become fully vested and exercisable as a result of the Change in
Control, with respect to the shares as to which each such option is not vested
and exercisable as of the date of the Change in Control (the "Unvested Shares"),
the Company shall cause each such option to become vested and exercisable as
follows: (1) as of the date of the Change in Control (the "Change Date"), such
option shall become vested and exercisable to the extent of (A) two-thirds of
the Unvested Shares multiplied by (B) a fraction, the numerator of which is the
number of full calendar months between (i) the date on which the most recent
incremental increase in the number of shares as to which such option is vested
and exercisable occurred pursuant to the terms of such option as a result of the
continued employment or service of the Executive (the "Most Recent Vesting
Date") and (ii) the Change Date, and the denominator of which is the number of
full calendar months between the Most Recent Vesting Date and the date on which
such option would have become fully vested and exercisable as a result of the
Executive's continued employment by the Company, assuming such employment
continued (the "Remaining Vesting Term"); (2) as of the end of each full
calendar month commencing on or after the date of the Change in Control, so long
as the continuous employment of the Executive by the Company has not ended, such
option shall become vested and exercisable to the extent of two-thirds of the
Unvested Shares divided by the number of full calendar months in the Remaining
Vesting Term and (3) as to the remainder of the Unvested Shares, the terms of
such option as in effect before the Change in Control shall continue to apply.

                  (f)      Gross Up Payment. Except as set forth below, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
9(f) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount


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of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 9(f), (i) if it shall
be determined that the Executive is entitled to a Gross-Up Payment, but that the
Executive, after taking into account the Payments and the Gross-Up Payment,
would not receive a net after-tax benefit of at least $100,000 (taking into
account both income taxes and any Excise Tax) as compared to the net after-tax
proceeds to the Executive resulting from an elimination of the Gross-Up Payment
and a reduction of the Payments, in the aggregate, to an amount (the "Reduced
Amount") such that the receipt of Payments would not give rise to any Excise
Tax, then no Gross-Up Payment shall be made to the Executive and the Payments,
in the aggregate, shall be reduced to the Reduced Amount and (ii) in the event
that the total Gross-Up Payment payable to the Executive, when combined with all
other similar amounts payable by the Company to or on behalf of other officers
and employees of the Company and its subsidiaries and affiliates with respect to
Excise Taxes imposed on amounts payable to such other officers and employees,
would otherwise exceed $10,000,000, the Gross-Up Payment payable to the
Executive shall not exceed $10,000,000 multiplied by a fraction, the numerator
of which is the Excise Tax payable by the Executive on the Payments (without
regard to the Gross-Up Payment) and the denominator of which is the aggregate
Excise Taxes payable by the Executive and all such other officers and employees
(determined without regard to such gross-up payments).

                           (1)      Subject to the provisions of Section
9(f)(2), all determinations required to be made under this Section 9(f),
including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by PriceWaterhouseCoopers LLP or such other
certified public accounting firm reasonably acceptable to the Company as may be
designated by the Executive in writing (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there
has been a Payment, or such earlier time as is requested by the Company In the
event that the Accounting Firm is serving as accountant or auditor for the
Company or any individual, entity or group effecting a change in the ownership
or effective control of the Company (within the meaning of Section 280G of the
Code), the Executive shall appoint another nationally recognized accounting firm
that is reasonably acceptable to the Company to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 9(f), shall be paid by the Company to the Executive within five days of
the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive; As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the


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Company should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 9(f)(1) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.

                           (2)      The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than 10 days after the
Executive is informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:

                                    (i)      give the Company any information
reasonably requested by the Company relating to such claim,

                                    (ii)     take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company,

                                    (iii)    cooperate with the Company in good
faith in order effectively to contest such claim, and

                                    (iv)     permit the Company to participate
in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(f)(2), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any


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administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

                           (3)      If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9(f)(2), the Executive
becomes entitled to receive any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the requirements of Section
9(f)(2)) promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(f)(2), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.

                  (g)      Liquidated Damages. The parties acknowledge and agree
that damages which will result to the Executive for termination by the Company
without Cause or other breach of this Agreement by the Company shall be
extremely difficult or impossible to establish or prove, and agree that the
amounts payable to the Executive under Sections 9(d) and (f) hereof (the
"Severance Payments") shall constitute liquidated damages for any breach of this
Agreement by the Company through the Date of Termination. The Executive agrees
that, except for such other payments and benefits to which the Executive may be
entitled as expressly provided by the terms of this Agreement or any applicable
benefit plan, such liquidated damages shall be in lieu of all other claims that
the Executive may make by reason of termination of his or her employment or any
such breach of this Agreement and that, as a condition to receiving the
Severance Payments, the Executive will execute a release of claims in a form
reasonably satisfactory to the Company.


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         10.      Notices. All notices, demands, requests, or other
communications which may be or are required to be given, served, or sent by any
party to any other party pursuant to this Agreement shall be in writing and
shall be hand delivered, sent by overnight courier or mailed by first-class,
registered or certified mail, return receipt requested, postage prepaid, or
transmitted by telegram, telecopy or telex, addressed as follows:

                  (i)      If to the Company:

                           S1 Corporation
                           3500 Lenox Road
                           Suite 200
                           Atlanta, GA  30326
                           Fax:  404/923-6717
                           Attn:  General Counsel

                  with a copy (which shall not constitute notice) to:

                           Stuart G. Stein
                           Hogan & Hartson, L.L.P.
                           555 13th Street, N.W.
                           Washington, D.C.  20004-1190
                           Fax:  202/637-5910


                  (ii)     If to the Executive:

                           Peter Dunning
                           543 Gramercy Drive
                           Marietta, Georgia 30068

                  with a copy (which shall not constitute notice) to:

                           Evelyn A. Ashley
                           Red Hot Law Group of
                             Long Aldridge & Norman
                           The Biltmore
                           817 West Peachtree Street, Ste. 400
                           Atlanta, Georgia  30308
                           Fax: 404 575 1901

         Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request, or communication which shall be hand
delivered, sent, mailed, telecopied or telexed in the manner described above, or


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which shall be delivered to a telegraph company, shall be deemed sufficiently
given, served, sent, received or delivered for all purposes at such time as it
is delivered to the addressee (with the return receipt, the delivery receipt, or
(with respect to a telecopy or telex) the answerback being deemed conclusive,
but not exclusive, evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.

         11.      Severability. The invalidity or unenforceability of any one or
more provisions of this Agreement shall not affect the validity or
enforceability of the other provisions of this Agreement, which shall remain in
full force and effect.

         12.      Survival. It is the express intention and agreement of the
parties hereto that the provisions of Sections 9, 10, 11, 13, 17 and 20 hereof
and this Section 12 shall survive the termination of employment of the
Executive. In addition, all obligations of the Company to make payments
hereunder shall survive any termination of this Agreement on the terms and
conditions set forth herein.

         13.      Assignment. The rights and obligations of the parties to this
Agreement shall not be assignable or delegable, except that (i) in the event of
the Executive's death, the personal representative or legatees or distributees
of the Executive's estate, as the case may be, shall have the right to receive
any amount owing and unpaid to the Executive hereunder and (ii) the rights and
obligations of the Company hereunder shall be assignable and delegable in
connection with any subsequent merger, consolidation, sale of all or
substantially all of the assets or stock of the Company or similar transaction
involving the Company or a successor corporation. The Company shall require any
successor to the Company to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.

         14.      Binding Effect. Subject to any provisions hereof restricting
assignment, this Agreement shall be binding upon the parties hereto and shall
inure to the benefit of the parties and their respective heirs, devisees,
executors, administrators, legal representatives, successors and assigns.

         15.      Amendment; Waiver. This Agreement shall not be amended,
altered or modified except by an instrument in writing duly executed by the
parties hereto. Neither the waiver by either of the parties hereto of a breach
of or a default under any of the provisions of this Agreement, nor the failure
of either of the parties, on one or more occasions, to enforce any of the
provisions of this Agreement or to exercise any right or privilege hereunder,
shall thereafter be construed as a waiver of any subsequent breach or default of
a similar nature, or as a waiver of any such provisions, rights or privileges
hereunder.

         16.      Headings. Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be


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a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.

         17.      Governing Law. This Agreement, the rights and obligations of
the parties hereto, and any claims or disputes relating thereto, shall be
governed by and construed in accordance with the laws of the State of Delaware
(but not including any choice of law rule thereof that would cause the laws of
another jurisdiction to apply).

         18.      Entire Agreement. This Agreement and the Related Agreement
constitutes the entire agreement between the parties respecting the employment
of the Executive, there being no representations, warranties or commitments
except as set forth herein.

         19.      Counterparts. This Agreement may be executed in two
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.

         20.      Definitions.

                  "Accounting Firm" is defined in Section 9(f)(1) above.

                  "Agreement" means this Employment Agreement.

                  "Base Salary" is defined in Section 5(a) above.

                  "Board" means the board of directors of the Company.

                  "Cause" means (i) the conviction of a felony or a crime
involving moral turpitude (excluding a traffic violation not involving any
period of incarceration) or the willful commission of any other act or omission
involving dishonesty or fraud with respect to, and materially adversely
affecting the business affairs of, the Company or any of its Subsidiaries or any
of their customers or suppliers, (ii) conduct tending to bring the Company or
any of its Subsidiaries into substantial public disgrace or disrepute that
causes substantial and material injury to the business and operations of the
Company or such Subsidiary, (iii) substantial and repeated failure to perform
duties of the office held by the Executive as reasonably directed by the CEO
(other than any such failure resulting from the Executive's incapacity due to
injury or illness), and such failure is not cured within 30 days after the
Executive receives written notice thereof from the CEO that specifically
identifies the manner in which the CEO believes the Executive has not
substantially performed his or her duties, (iv) gross negligence or willful
misconduct with respect to the Company or any of its Subsidiaries that causes
substantial and material injury to the business and operations of the Company or
such Subsidiary or (v) any material breach of the Related Agreement. For
purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful"


                                       13
<PAGE>

unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission was in the
best interests of the Company. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board or based upon advice of
counsel for the Company or at the direction of the CEO shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and
in the best interests of the Company.

                  "Change Date" is defined in Section 9(e) above.

                  "Change in Control" means the earliest to occur of the
following: (i) any person (other than a corporation (a "Holding Company") all of
the common stock of which is owned, immediately after the transaction, by
persons who owned more than 50 percent of the voting shares of the Company
immediately before the transaction) becomes the beneficial owner of 50 percent
or more of the total number of voting shares of the Company; (ii) any person
(other than the persons named as proxies solicited on behalf of the Board) holds
revocable or irrevocable proxies, as to the election or removal of two or more
directors of the Company, for more than 50 percent of the total number of voting
shares of the Company; (iii) any person (other than a Holding Company) has
commenced a tender or exchange offer, or entered into an agreement or received
an option, to acquire beneficial ownership of more than 50 percent of the total
number of voting shares of the Company; (iv) there is a sale or other transfer
of all or substantially all of the assets of the Company other than to a Holding
Company or a corporation controlled by the Company or (v) as the result of, or
in connection with, any cash tender or exchange offer, merger, or other business
combination, sale of assets or contested election, or any combination of the
foregoing transactions, the persons who were directors of the Company before
such transaction shall cease to constitute at least a majority of the Board or
any successor corporation. In the event that the Company (or any successor
entity) becomes a subsidiary of a Holding Company, references to the Company in
the preceding sentence shall be deemed to be references to the Holding Company.
Notwithstanding the foregoing, a "Change in Control" will not be deemed to have
occurred under clauses (ii) or (iii) above if within 30 days of such action, the
Board (by a two-thirds affirmative vote of the directors in office before such
action occurred) makes a determination that such action does not and is not
likely to constitute a change in control of the Company. For purposes of this
definition, a "person" includes an individual, corporation, partnership, trust,
association, joint venture, pool, syndicate, unincorporated organization,
joint-stock company, or similar organization or group acting in concert. A
person for these purposes shall be deemed to be a beneficial owner as that term
is used in Rule 13d-3 under the Securities Exchange Act of 1934, as amended.

                  "Code" means the Internal Revenue Code of 1986, as amended.


                                       14
<PAGE>

                  "Company" means S1 Corporation and its successors and assigns.

                  "Date of Termination" means (i) if the Executive's employment
is terminated by the Executive's death, the date of the Executive's death; (ii)
if the Executive's employment is terminated because of the Executive's
disability pursuant to Section 8(a)(ii)(A) hereof, 30 days after Notice of
Termination, provided that the Executive shall not have returned to the
performance of the Executive's duties on a full-time basis during such 30-day
period; (iii) if the Executive's employment is terminated by the Company for
Cause pursuant to Section 8(a)(ii)(B) hereof or by the Executive pursuant to
Section 8(a)(iii) hereof, the date specified in the Notice of Termination; or
(iv) if the Executive's employment is terminated during the Employment Period
other than pursuant to Section 8(a), the date on which Notice of Termination is
given.

                  "Effective Date" means January 14, 2002.

                  "Employment Period" is defined in Section 2 above.

                  "Excise Tax" is defined in Section 9(f) above.

                  "Executive" means Peter Dunning

                  "Good Reason" means (i) the Company's failure to perform or
observe any of the material terms or provisions of this Agreement, and the
continued failure of the Company to cure such default within 30 days after
written demand for performance has been given to the Company by the Executive,
which demand shall describe specifically the nature of such alleged failure to
perform or observe such material terms or provisions; (ii) a material reduction
in the scope of the Executive's duties (including, without limitation, any
merger, consolidation, reorganization, sale of stock or assets or other
transaction that results in the Executive reporting to anyone in a position
having less authority than the person to whom the Executive reported immediately
before such transaction, or any failure of the parent corporation of any
controlled group of corporations that includes the Company, if the Company is
not such parent corporation, to offer to the Executive a position with such
parent corporation involving the same or substantially equivalent duties as the
Executive's position with the Company under this Agreement) without his or her
written consent; (iii) any requirement by the Company without the written
consent of the Executive that the Executive relocate to a place more than 50
miles from Atlanta, Georgia to perform his or her duties hereunder; or(iv) the
failure of the Company to obtain the assumption of the Company's obligations
under this Agreement by a successor as contemplated by Section 13 of this
Agreement.

                  "Gross-Up Payment" is defined in Section 9(f) above.


                                       15
<PAGE>

                  "Initial Term" is defined in Section 2 above.

                  "Most Recent Vesting Date" is defined in Section 9(e) above.

                  "Non-Renewal" is defined in Section 2 above.

                  "Notice of Termination" is defined in Section 8(b) above.

                  "Payment" is defined in Section 9(f) above.

                  "Reduced Amount" is defined in Section 9(f) above.

                  "Related Agreement" is defined in Section 7 above.

                  "Remaining Vesting Term" is defined in Section 9(e) above.

                  "Severance Payments" is defined in Section 9(f) above.

                  "Severance Period" is defined in Section 9(d) above.

                  "Subsidiary" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries and any partnership,
limited liability company or other entity in which the Company or any subsidiary
owns a controlling interest.

                  "Underpayment" is defined in Section 9(f)(1) above.

                  "Unvested Shares" is defined in Section 9(e) above.

                  "Vesting Period" is defined in Section 9(d) above.


                                       16
<PAGE>

         IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement, or have caused this Agreement to be duly executed and delivered
on their behalf, as of the Effective Date.

                                           S1 CORPORATION



                                           By:/s/ Meigan Putnam
                                              ----------------------------------
                                           Title: SVP - Administration
                                                 -------------------------------
                                           Date:
                                                --------------------------------



                                           THE EXECUTIVE:



                                           /s/ Peter Dunning
                                           -------------------------------------

                                           Date:
                                                --------------------------------


                                       17
<PAGE>


                                                                      SCHEDULE A

For purposes of Sections 9(d) and (e) above, additional pro rata vesting under
the following option agreements shall be calculated as follows:

-        S1 Corporation 1997 Employee Stock Option Plan Non Qualified Option
         Agreement dated as of ______________ by and between S1 Corporation and
         _______________: If the last day of the Vesting Period is not a Vesting
         Date (as defined in such Option Agreement) and the option granted
         pursuant to such Option Agreement would not have become fully vested
         and exercisable as of such last day if the Executive had continued to
         be employed by the Company during the Vesting Period, as of the Date of
         Termination the option shall be vested and exercisable as to an
         additional percentage of the shares of Stock (as defined in such Option
         Agreement) equal to 2.0833% multiplied by the number of full months
         (not in excess of 12) from the last Vesting Date that would have
         occurred during the Vesting Period to and including the last day of the
         Vesting Period.