ECONOMIC PARTICIPATION AGREEMENT

     This Economic Participation  Agreement (the "Agreement") dated December 30,
1999 is made by and between U.S.  Wireless  Data,  Inc., a Colorado  corporation
(the "Company") and ComVest Capital Management LLC ("ComVest").

                              W I T N E S S E T H:

     WHEREAS, ComVest is concurrently herewith making available to the Company a
secured loan (the "Loan") in an amount up to $1.0 million,  which amount will be
funded  $195,000 on the date  hereof and the  balance  may be borrowed  upon the
satisfaction or waiver of certain conditions; and

     WHEREAS,  as an  inducement  for  ComVest to make the Loan the  Company has
agreed to issue  warrants  (the  "Warrant")  to ComVest to  purchase  13,636,363
shares; and

     WHEREAS,  the Company does not have sufficient  authorized shares of Common
Stock as would be  required  to be  reserved  under the  Warrant  to enable  the
Warrant to be exercised in full; and

     WHEREAS,  the Company's Board of Directors will approve as soon as possible
an amendment (the "Amendment") to the Company's  Certificate of Incorporation to
increase  the number of  authorized  shares of Common Stock so that the Company,
among other things,  will be able to reserve all shares that may be  exercisable
under the  Warrants and the Company has agreed to use its best efforts to obtain
shareholder approval of the Amendment; and

     WHEREAS,  the Company is entering into this  Agreement to grant ComVest the
economic equivalent of ownership of those shares of Common Stock as to which the
Warrant is not then exercisable; and

     WHEREAS,  once the Company has obtained the requisite  shareholder approval
for the Amendment and has amended its Certificate of Incorporation thereby, this
Agreement  shall be  cancelled in  consideration  of the Company  reserving  for
issuance  under the  Warrant  sufficient  shares of Common  Stock  such that the
Warrant may be exercised in full.

     NOW, THEREFORE,  for and in consideration of ten dollars and other good and
valuable  consideration,   including  the  premises,   promises,  covenants  and
agreements  made  herein,  the  receipt  and  sufficiency  of which  are  hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:

          1. Economic Participation. Upon any sale, liquidation, dividend (other
     than  mandatory  dividends  payable under the Company's  Series B Preferred
     Stock  as  in   effect   as  the  date   hereof),   distribution,   merger,
     consolidation,  restructuring,  reorganization or other similar transaction
     involving the Company, or upon a sale, lease, license or transfer of all or
     at least a majority of the assets of the Company, or if any person or group
     (as  defined in  Section  13 of the  Securities  Exchange  Act of 1934,  as
     amended),  acquires  or receives  any shares of Common  Stock so that after
     such  acquisition  or receipt such person or group owns at least a majority
     of the  outstanding  shares of Common Stock in each case in one or a series
     of  transactions,  the Company will pay (in cash or at ComVest's  option if
     applicable   in  the  form  of   consideration   received  by  such  common
     shareholder)  to ComVest an amount  equal to the  product of (A) the amount
     paid or received by a common  shareholder of the Company in respect of each
     share held in connection  with the  transaction  triggering  the payment to
     ComVest  and (B) the  Adjusted  Shares.  For  purposes  of this  Agreement,
     "Adjusted Shares" shall mean 13,636,363 shares of Common Stock which amount



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     shall be  decreased by (i) the  aggregate  number of shares of Common Stock
     hereafter  reserved for issuance by the Company under the Warrant (adjusted
     for any  adjustments  in the number of shares  subject to the  Warrant) and
     (ii)  6,818,182  shares  (which  number  shall be reduced by 1 for each two
     shares of Common Stock  hereafter  reserved for issuance  under the Warrant
     and further proportionately adjusted to take into effect any changes to the
     shares of Common Stock subject to the Warrant) in the event of a Forfeiture
     Event as defined in the Warrant.

          2. Termination of This Agreement. At such time as the number of shares
     of Common Stock that are reserved for issuance upon exercise of the Warrant
     are  sufficient  to allow the  Warrant  to be  exercised  in full (with all
     adjustments  as may be made  pursuant  to the terms of the  Warrant),  this
     Agreement shall automatically terminate,  unless ComVest shall have already
     exercised its right to liquidated  damages pursuant to Section 3 hereof, in
     which event the  termination of this Agreement shall be governed by Section
     3.

          3.  Liquidated  Damages.  If  this  Agreement  should  not  have  been
     automatically  terminated  as  contemplated  by Section 2 hereof within 120
     days of the date of this  Agreement,  then the Company shall pay to ComVest
     on such 120th day a nonconversion  fee of $500,000 and, in addition,  until
     such time as this  Agreement  is  terminated  as provided in such  section,
     ComVest may elect to receive in cash in  consideration  of  canceling  this
     Agreement  the  greater of (A) $2.0  million or (B) the  product of (1) the
     Adjusted  Shares and (2) the  remainder of (x) the closing  asking price of
     the Common  Stock on the last trading date prior to the exercise by ComVest
     of its liquidation  right and (y) $0.01.  ComVest may exercise its right to
     receive a liquidated  damage  payment by delivering a written notice to the
     Company by facsimile transmission, by hand, by overnight courier or by U.S.
     mail and such  notice  will be deemed  received  by the Company on the date
     sent by  ComVest  unless  the  Company  can  thereafter  prove no  delivery
     thereafter actually occurred.

          4.  Complete  Agreement.   This  Agreement  constitutes  the  complete
     understanding  among the parties  with  respect to its  subject  matter and
     prior  agreements  and  understandings  among any of the parties hereto are
     hereby superseded and terminated and shall have no further force or effect.

          5. Section Headings.  The section headings contained in this Agreement
     are for reference purposes only and shall not affect in any way the meaning
     or interpretation of this Agreement.

          6.  Successors and Assigns.  All of the terms of this Agreement  shall
     inure to the  benefit  of and  shall be  binding  upon the  successors  and
     assigns of the parties hereto except that the Company may not assign any of
     its obligations hereunder.

          7. Governing  Law. This Agreement  shall be governed by, and construed
     and enforced in accordance with the laws of the State of New York,  without
     giving effect to the provisions,  policies or principles thereof respecting
     conflict or choice of laws.

          8.  Modification;  Amendment.  Except as  otherwise  provided  herein,
     neither this Agreement nor any provision  hereof can be modified,  amended,
     changed, discharged or terminated except by an instrument in writing signed
     by the parties hereto.

          9.  Counterparts.  This  Agreement  may be  executed  in  one or  more
     counterparts,  each of which shall be deemed an  original  but all of which
     taken together shall constitute one and the same agreement.



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          10.  Severability.  If at any  time  subsequent  to the  date  of this
     Agreement,  any provision of this  Agreement  shall be held by any court of
     competent jurisdiction to be illegal, void or unenforceable, such provision
     shall be of no force or effect but the  illegality or  enforceable  of such
     provision  shall have no effect  upon or impair the  enforceability  of any
     other provision.

     IN WITNESS  WHEREOF,  the parties  hereto have executed and delivered  this
Agreement as of the date first above written.

                                            U.S. WIRELESS DATA, INC.


                                            By:
                                                --------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                            COMVEST CAPITAL MANAGEMENT LLC

                                            By:
                                                --------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------
















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