Lockup Agreement


     Whereas, Pipeline Data Inc., a Delaware corporation (the "Buyer"), Northern
Merchants  Services,  Inc.,  a New  York  corporation  (the  "Company")  and the
Stockholders  named on  Schedule  A  hereto  (the  "Sellers")  have  entered  an
Acquisition   Agreement,   dated  as  of  August  26,  2002  (the   "Acquisition
Agreement");

     Whereas, Pipeline believes that its ability to trade its securities will be
enhanced if the  individuals  party hereto  agree to refrain from selling  their
current  shareholdings in Pipeline subject to the terms and conditions set forth
herein;

     Whereas,  the parties hereto are  substantial  stockholders in Pipeline and
are amenable to having their share holdings being so restricted;

     Now  therefore,  in  consideration  of the foregoing and for other good and
valuable  consideration,  the sufficiency of which is hereby  acknowledged,  the
parties agree as follows:

     1.  Restriction of Shares:  Each of the parties  hereto,  severally and not
jointly,  hereby  agrees that during the period  commencing on the Closing Date,
and for the period  stated  below with  respect to each  individual  party (such
periods referred to as the "Lockup  Period(s)"),  that such individual's present
beneficial  holdings  shareholdings  (as set forth beside the  signature of such
individual)  in  Pipeline,  may not be  offered,  sold,  transferred,  assigned,
pledged, hypothecated, or otherwise alienated, nor may any executory interest be
created  which would  allow,  or permit any of the  foregoing  during the Lockup
Period.

     2. Individual Lockup Periods:

     As to the Sellers. From the Closing Date.

     Until 90 days after the Closing Date - 0%

     Upon 90 days after the Closing Date - 15%

     Upon 180 days after the Closing Date - 25%

     For each of the 6 months commencing on the 361st day after the Closing Date
- 10% per month.


     3. Definition of beneficial ownership:  For the purposes of this Agreement,
"beneficial  ownership"  shall  have the same  meaning as that set forth in Rule
13d-3,  as in effect on the date hereof,  promulgated  under the  Securities and
Exchange Act of 1934, as amended.


     4.  Successors  and  assigns:  The  restrictions  set forth herein shall be
binding upon the parties,  their  successors,  assigns,  legal  representatives,
distributees,  and any other person, whether a natural person or a legal entity,
who shall be vested with any interest in the Restricted Shares.

     5. Shares to be Legended:  The shares  subject to this  Agreement  shall be
marked with a prominent legend stating that such shares are subject to the terms
and  conditions  hereof,  and  may  only be  transferred  subject  to the  prior
presentation  of a legal opinion of counsel to the  transferor,  satisfactory to
Pipeline  and its counsel,  to the effect that any such  transfer may be validly
effected under the terms of this Agreement and other applicable law.

     6. Governing law and submission to jurisdiction:  By their execution below,
the parties  hereto  acknowledge  that this  Agreement  shall be governed by the
internal  laws  of the  State  of New  York,  determined  without  reference  to
principles of conflicts of laws, and that any legal  proceeding  with respect to
this Agreement shall be subject to the  jurisdiction of the federal and/or state
courts located in the Borough of Manhattan, New York

     7. Counterparts and Facsimile  Delivery:  This Agreement may be executed in
one or more  counterparts  with all such  counterparts to constitute but one and
the same  agreement,  and  facsimile  transmission  of signature  pages shall be
effective as manual delivery thereof.


     8. Additional  Share Award  Acknowledgement:  The Sellers  acknowledge that
they may be awarded  additional shares pursuant to certain earn-in provisions of
the Acquisition  Agreement.  The Sellers agree and acknowledge  that these share
are  subject  to the terms  and  conditions  of this  Agreement.  It is  further
acknowledged  that the lock-up periods shall commence from the date their shares
are issued to them.


Dated as of August 26, 2002

Pipeline Data, Inc.

By:/s/ MacAllister Smith
Name:MacAllister Smith
Title:Chief Executive Officer

/s/ Kevin Weller
Kevin Weller
( 500,000 Shares)


/s/ Nancy Weller
Nancy Weller
( 500,000 Shares)