EMPLOYMENT AGREEMENT


         This  Employment  Agreement is effective  as of August 21, 1998, by and
between Evon A. Kelly  ("Employee"),  and U.S.  Wireless Data,  Inc., a Colorado
corporation ("USWD").

         WHEREAS,  Employee has agreed to resign as Chief Executive  Officer and
as a Director of USWD effective upon execution of this Agreement; and

         WHEREAS,  Employee and USWD have agreed that Employee shall continue to
provide services to USWD pursuant to the terms of this Agreement;

         NOW,  THEREFORE,  in  consideration of the premises and mutual promises
and agreements hereinafter set forth, the parties agree as follows:

         1.  Services.

                  1.1 Services. Employee will perform, for and on behalf of USWD
(or any subsidiary or third party designated by USWD), those services identified
and  agreed  upon from time to time by  Employee  and USWD,  including,  but not
limited to,  transition  assistance,  public  relations and assistance with such
matters as may be assigned to him from time to time. Employee shall perform such
services  to the best of his  ability  and  shall be  responsible  to the  Chief
Executive Officer of USWD.

                  1.2  Availability.  Employee  shall make himself  available to
USWD for services to be rendered  hereunder on  a"full-time"  basis,  subject to
vacation  and  leave  policies  as  are  applicable  to  other  executive  level
management   employees  of  USWD.  USWD   acknowledges  that  Employee  will  be
establishing a consulting  business at the same time as he serves as an Employee
of USWD  under  this  Agreement.  USWD  agrees  that so long as such  consulting
business  does  not  violate  any of the  other  terms  or  conditions  of  this
Agreement,  such  action  by  Employee  shall  not be  deemed  to  violate  this
Agreement.

         2.  Compensation and Benefits.

                  2.1 Fees.  In  consideration  for the  services  performed  by
Employee hereunder,  USWD shall pay Employee an annualized salary of One Hundred
and Fifty  Thousand  Dollars  ($150,000),  to be paid twice  monthly,  at USWD's
regular pay dates.

                  2.2  Benefits.  Employee  shall be  entitled  to the  benefits
generally  available  to other  executive  level  management  Employees of USWD,
including the benefits set forth on Exhibit A attached  hereto,  as the same may
be modified for all executive level USWD employees from time to time.
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         3. Term. The term of this  Agreement  shall commence on the date hereof
and continue for one year (the "Period of Employment"), unless sooner terminated
pursuant to the provisions of Section 6 below.

         4. New Business Ideas. Employee agrees to disclose promptly to USWD the
full  details  of any  and all  business  ideas  ("Subject  Ideas"),  which  are
conceived by Employee  during the term of this Agreement and which relate to the
wireless  credit  and/or  debit card  transaction  processing  business of USWD.
Employee  agrees to assign to USWD,  without further  consideration,  his entire
right, title and interest in and to each and every Subject Idea described above,
which shall be the sole and exclusive  property of USWD and that, if protectable
by  copyright,  they are  "works  made for hire," as that term is defined in the
United States Copyright Act (17 USCA, Section 101).

         5.  Confidential Information.

                  5.1 Employee acknowledges that prior to and during the term of
this  Agreement,  Employee  has  had,  and  may  have  access  to,  confidential
information  with  respect to the business of USWD and its  affiliates  and that
during the term of this Agreement and for two years thereafter, he will hold all
confidential  information in confidence and not disclose or use it except to the
extent necessary to carry out his responsibilities under this Agreement.

                  5.2 All copies of  confidential  information in his possession
or control shall be returned promptly to USWD upon USWD's request.

                  5.3  Confidential  information  shall not include  information
which:  (1) is developed  by Employee  outside the scope of this  Agreement  and
independent  of  USWD's  confidential  information;  (2)  is or  becomes  public
knowledge without breach of this Agreement, or (3) is disclosed to Employee by a
third party without violation of any obligation of non-disclosure.

         6.   Termination.   This   Agreement,   together  with  the  employment
relationship  and the  Period  of  Employment,  shall  terminate  under  certain
circumstances as follows. The termination of the employment relationship and the
Period of Employment shall not terminate the obligation of the parties to comply
with those terms of this Agreement  intended to extend beyond the termination of
the Period of Employment,  including without limitation,  those obligations with
respect to confidentiality and non-competition.

                  6.1 Death.  This Agreement and the Period of Employment  shall
automatically terminate upon the death of the Employee.

                  6.2  Disability.  This  Agreement and the Period of Employment
shall automatically terminate in the event of the Disability of the Employee and
Employee is entitled to draw benefits under the Company's short-term  disability
policy, subject to any

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limitations imposed by applicable law. "Disability" shall have the meaning given
to such term in the  Employer's  short-term  disability  insurance  policy as in
effect from time to time.

                  6.3 Cause.  This Agreement and the Period of Employment  shall
terminate at the option of the Employer immediately upon delivery by Employer of
written notice to Employee that:

                            (a)  Employee  has  acted or failed to act in such a
         fashion as to constitute dishonesty, fraud, or other serious misconduct
         deemed by Employer to have a material adverse effect upon the operation
         of the Employer's business, or

                            (b)   Employee   has  failed  to   successfully   or
         adequately  perform his or her work  obligations  as the same have been
         delegated to him or her, or

                            (c)  Employee  accepts  full-time   employment  with
         another  employer  or  assumes  obligations  under  any  other job that
         require Employee's full time commitment to such obligations or job.

         This Agreement may not be terminated except as provided in this Section
6. In the event of any termination pursuant to paragraphs 6.1, 6.2 or 6.3 above,
Employee  shall be  entitled  to receive his salary  and/or  other  compensation
through  the  effective  date of  termination,  but shall not be entitled to any
severance or other compensation following the effective date of termination.  In
the event of termination  pursuant to paragraphs 6.1 or 6.2 above,  the Employee
shall be entitled to any benefits payable under any health, welfare or insurance
plan maintained by the Employer which covers such event.

         7.  Non-Competition.

                  7.1  Employee  agrees  that he  possesses,  by  virtue  of his
employment  with USWD and the  continuing  relationship  with  USWD,  knowledge,
skills  and  reputation  in the  industry  in which USWD  operates  which are of
material  importance  to USWD and which are special,  unique and  extraordinary.
Employee  acknowledges that the loss of his services, or the use of his services
by a competitor, may cause irreparable harm to USWD. Therefore,  Employee agrees
that during the period commencing with the date hereof and ending one year after
his employment with USWD is terminated (the "Restricted Period") (voluntarily or
involuntarily)  he will not knowingly,  directly or indirectly,  as a principal,
officer,  director,  shareholder  (other  than  as a  holder  of 2% or less of a
publicly traded corporation's capital stock), partner, employee,  consultant, or
in any other capacity  whatsoever,  engage in, be or become  associated with, or
advise or assist any business, firm, partnership,  individual,  corporation,  or
any other  entity  which is  engaged in the  business  of  creating,  marketing,
selling,  leasing or placing products or services which are competitive with the
business of USWD at the time  Employee's  relationship  with USWD is terminated.
During the Restricted

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Period,  Employee  will not solicit any  employee of USWD to leave the employ of
USWD or solicit  the  business  of any client or customer of USWD (other than on
behalf of USWD).

                  7.2 It is agreed that Employee's services are unique, and that
any breach or threatened breach by Employee of any provision of this Section may
not be  remedied  solely by  damages.  Accordingly,  in the event of a breach or
threatened  breach by Employee of any of the  provisions of this Section 7, USWD
shall be entitled to injunctive relief,  restraining  Employee and any business,
firm,  partnership,  individual,  corporation,  or entity  participating in such
breach or attempted breach, from engaging in any activity which would constitute
a breach of this  Section 7.  Nothing  herein,  however,  shall be  construed as
prohibiting USWD from pursuing any other remedies  available at law or in equity
for such breach or threatened breach, including the recovery of damages.

         8.  Stock  Options.  Employee  is the holder of a  non-qualified  stock
option issued by USWD as of August 4, 1998,  which is exercisable to purchase up
to a total of 600,000  shares of USWD's no par value  common  stock at $1.00 per
share through  August 4, 2007,  subject to vesting and  termination  as provided
therein (the "Stock  Option").  A copy of the Stock Option Agreement is attached
hereto as Exhibit 2.  Employee and USWD have also entered into an  understanding
(as  stated in the  minutes of a meeting  of the Board of  Directors  of USWD of
November  21,  1997)  by  which  Employee  is to be  reimbursed  by USWD for the
difference,  if any,  in tax  consequences  to him that arise as a result of the
Stock  Option  having been issued as a  non-qualified  option,  as opposed to an
incentive  stock option.  Employee shall remain the owner and beneficiary of the
Stock Option,  which shall  continue in full force and effect through the Period
of  Employment,  subject  to the same  terms as  existed  prior to entry of this
Agreement;  provided,  however,  that with  respect to the  accelerated  vesting
provisions of the Stock Option upon the occurrence of "Certain  Reorganizations"
of the Company,  as described  in Section 10 of the Stock Option  Agreement,  if
this Agreement is in effect at the time of any such  reorganization,  the number
of options that shall  immediately  vest upon any such  reorganization  shall be
limited to the  number of  options  that would be vested as of the date one year
from the effective date of this Agreement.

         9. Cooperation.  Employee  acknowledges that as Chief Executive Officer
and a director of USWD he had certain duties and  obligations to USWD.  Employee
agrees to take such actions, including the signing of formal USWD documents such
as reports,  minutes and the like, as are reasonable and necessary and pertinent
to the time during which he served as Chief Executive  Officer and a director of
USWD, to assist USWD in an orderly transition from his status as Chief Executive
Officer and a director of USWD.

         10.  Publicity.  Except as may be otherwise  required by law,  Employee
shall  have the  right  to  review  and  approve  any  public  announcements  or
statements made by USWD or any person acting on USWD's behalf,  which mention or
refer to Employee or his relationship with USWD.


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         11.  Arbitration;  Legal Fees. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by arbitration
in San  Francisco,  California,  in  accordance  with the rules of the  American
Arbitration  Association then in effect. Such arbitration shall be presided over
by a single  arbitrator if the parties agree on such person within  fifteen (15)
days of the date of a written  demand for  arbitration  by either party.  If the
parties cannot so agree on a single  arbitrator,  then such arbitration shall be
before a three member panel and each party shall appoint one  arbitrator  within
thirty  (30)  days of the  initial  date of  demand  by  either  party.  The two
arbitrators so appointed  shall appoint the third  arbitrator  within 45 days of
the date of the initial demand for arbitration by either party.  The arbitration
shall occur  within 120 days of the  initial  demand for  arbitration  by either
party.  Discovery  shall be  available  in any such  arbitration  to the  extent
necessary  to prevent any party from being  prejudiced  by a lack of  discovery.
Judgment  may  be  entered  on  the  arbitrator's  award  in  any  court  having
jurisdiction.  The prevailing party in any such arbitration shall be entitled to
recover all reasonable legal fees and costs and other fees and expenses incurred
in respect of any dispute or  controversy,  which fees and costs may be included
in the award  rendered  by the  panel in the  proceeding.  Notwithstanding  this
provision,  the parties agree that any action required as a result of the breach
or  threatened  breach  of any  term of  this  Agreement  which  may  result  in
irreparable  injury to a party and which  would  therefore  be  appropriate  for
injunctive  relief  may be  brought  in the  court  and  location  described  in
paragraph 11.4 of this Agreement.

         12.  Miscellaneous.

                  12.1 Assignment.  USWD may assign this Agreement or any of its
rights  hereunder  to any  affiliate  of USWD or to any  successor  to USWD  who
assumes the  business of USWD  through  merger,  purchase of assets or any other
transaction.  The duties and  obligations  of Employee  hereunder are unique and
Employee  shall  therefore not be entitled to assign his duties and  obligations
under this Agreement to any other person.

                  12.2 Entire Agreement and Amendment.  This Agreement (together
with its attachments) constitutes the entire agreement between USWD and Employee
and any  verbal  or  written  communication  between  the  parties  prior to the
adoption of this Agreement shall be deemed merged herein and of no further force
and effect. This Agreement may only be altered or amended by a writing signed by
the Employee and an authorized officer of USWD.

                  12.3 Waiver.  Neither the delay or failure by USWD or Employee
to exercise any right under this  Agreement,  nor partial or single  exercise of
any such right, shall constitute a waiver of that or any other right.

                  12.4  Governing Law and Venue.  This Agreement is entered into
in  Emeryville,  California,  and as such it shall be  interpreted  and enforced
under the laws of the State of  California  applicable  to contracts  made to be
performed entirely within California.

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In the event that any one or more  provision in this  Agreement  shall,  for any
reason,  held to be invalid,  illegal,  or  unenforceable  in any respect,  such
invalidity, illegality, or unenforceability shall not affect any other provision
of this  Agreement,  but this Agreement  shall be construed as if such provision
had never been contained  herein.  Unless  submitted to arbitration  pursuant to
Section 11 of this  Agreement,  the proper  venue for any legal action as to the
interpretation  or enforcement of this Agreement shall be a court of appropriate
jurisdiction located in the San Francisco Bay area of California.

                  12.5  Interpretation.  In the  event  that  any  one  or  more
provisions of this Agreement shall, for any reason, held to be invalid, illegal,
or   unenforceable   in   any   respect,   such   invalidity,   illegality,   or
unenforceability  shall not affect any other  provision of this  Agreement,  but
this Agreement  shall be construed as if such provision had never been contained
herein. If any provision in this Agreement shall be held to be excessively broad
as to duration,  activity or subject in any jurisdiction,  it shall be construed
by limiting and reducing the  provision  which is deemed  excessively  broad.  A
limitation or reduction in the application of any provision in one  jurisdiction
shall  not  affect  the   application   of  the  same  provision  in  any  other
jurisdiction.

                  12.6  Notices.  Any  notice  required  or  permitted  by  this
Agreement  shall be  effective  when  received,  and shall be  sufficient  if in
writing  and  personally  delivered  (including  by express  courier) or sent by
certified  mail with return  receipt to the address set forth at the end of this
Agreement or at such other address as may by notice be specified by one party to
the other.

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

                  12.8 Headings. The headings used for the sections,  paragraphs
and  subparagraphs  of this Agreement are for  convenience are not a substantive
part of this Agreement.  The headings shall not be used to interpret or construe
any of the substantive terms of this Agreement.

                  12.9  Review  and  Construction.  Each of the  parties to this
Agreement has had the opportunity to have this Agreement  reviewed by counsel of
their own choosing.  Neither this  Agreement nor any provision of this Agreement
shall be  construed  or  interpreted  "against"  any  party as a result  of such
party's having "drafted" the Agreement or any provision of this Agreement.


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

                                            U.S. WIRELESS DATA, INC.


                                            By: /s/ Rod L. Stambaugh
                                            ------------------------
                                            Name:   Rod L. Stambaugh
                                                               
                                            Title: President  


                                            EMPLOYEE

                                            /s/ Evon A. Kelly
                                            -----------------
                                                Evon A. Kelly







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<PAGE>
                                    EXHIBIT 1


                          BENEFITS PACKAGE DESCRIPTION


<PAGE>


                                    EXHIBIT 2


                             STOCK OPTION AGREEMENT