SecProbe.io

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Room 4561
							July 19, 2005

Paul Egan
President
FreeStar Technology Corporation
Calle Fantino Falco
J.A. Baez Building, 2nd Floor
Santo Domingo, Dominican Republic

Re:	FreeStar Technology Corporation
Form 10-KSB for Fiscal Year Ended June 30, 2004
Form 10-KSB Amendment No. 1 for Fiscal Year Ended June 30, 2004
Forms 10-QSB for Fiscal Quarters Ended September 30, 2004,
December
31, 2004 and March 31, 2005
		File No. 0-28749

Dear Mr. Egan:

      We have reviewed the above referenced filings and have the
following comments.  Please note that we have limited our review
to
only your financial statements and related disclosures and do not
intend to expand our review to other portions of your document. We
may ask you to provide us with supplemental information so we may
better understand your disclosure.  Please be as detailed as
necessary in your explanation.  After reviewing this information,
we
may raise additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

Form 10-KSB for Fiscal Year Ended June 30, 2004

Certain Indebtedness, pages 38 through 40

1. With regard to the financing transactions described in
paragraph
(d) of this section, please summarize how you accounted for this
series of transactions and the authoritative accounting literature
upon which you based your accounting.

Form 10-KSB Amendment No. 1 for Fiscal Year Ended June 30, 2004

Reports of Independent Registered Public Accounting Firms, pages 5
and 6

2. We note that your primary operations are located in Finland,
your
principal offices are located in the Dominican Republic and your
auditors are located in New York. We also note that your former
auditors were located in California.  Please tell us the
circumstances that led you to retain these particular audit firms
in
their respective locations.

Consolidated Statements of Operations, page 9

3. It appears that you have classified all of your depreciation
and
amortization expense within selling, general and administrative
expense.  Tell us how your presentation complies with SAB Topic
11B
and Question 17, FASB Staff Implementation Guidance on applying
Statement 86.

4. Separate income statement classifications based solely on the
form
of consideration is not appropriate (i.e., non-cash compensation).
Tell us why you have not classified the non-cash compensation
costs
to the appropriate line items based on the function of the
individual
who received the benefit (i.e., cost of revenue, selling, general
and
administrative, etc.)

Consolidated Statement of Stockholders` Equity, page 12

5. We note that during 2004 there were 4.6 million shares of
common
stock issued "in error."  Please tell us the circumstances
surrounding this transaction and how this "error" occurred.  In
addition, tell us whether there are any other instances of shares
being issued "in error."  Your response should describe how, and
when, you accounted for the issuance and cancellation of any such
shares, including your recording of a "shares cancellation
receivable."  Please identify the specific accounting literature
upon
which your accounting is based.

6. Tell us how your certifying officers considered the impact of
the
issuance of common shares "in error" on the adequacy of your
disclosure controls and procedures as of the end of the period
covered by your periodic report for the related period(s).
Similarly
address the restatement you disclose in Note 5 in your December
31,
2004 Form 10-Q-SB.

Note 1 - Summary of Significant Accounting Policies

Revenue Recognition, page 19

7. With regard to your revenue recognition policies we have the
following comments:

a. Within the description of your Business you describe nine types
of
products and services and in MD&A you describe five core payment
processing products (pages 8 through 16 and page 27 of the Form
10-
KSB filed on October 27, 2004, respectively.) We also note your
statement that revenue is "primarily generated" from transaction
fees.  Please clarify which "transaction fees" you are referring
to
in this statement and tell us the amounts of revenue for the year
ended June 30, 2004 and for the nine months ended March 31, 2005,
attributable to each of the product types and services you have
described;

b. Identify the individual elements included in each type of
transaction and the timing under which you provide the
deliverables,
incur costs and are paid by your customers, including any up-front
fees you may receive. Your response should describe how your
policies
address all of the four general criteria identified in SAB 104 and
identify all authoritative literature that you have relied on in
developing your revenue recognition policies, including your
consideration of the applicability of SOP 97-2;

c. Your arrangements appear to contain multiple elements.  Tell us
how you allocate revenue to the various elements contained in your
arrangements, including the relevant accounting guidance on which
your allocations are based; and,

d. Tell us the payment terms you offer and what you believe your
normal and customary payment terms are.  Explain why your accounts
receivable balance at December 31, 2004 is so significant relative
to
your second quarter sales.

Capitalized Software Development Costs, page 20

8. We note that you account for capitalized software development
costs in accordance with SFAS No. 86.  Please clarify the nature
of
your "transaction processing software" and why you have accounted
for
these costs under SFAS No. 86 and not under SOP 98-1.

9. Tell us the nature and intended use of the capitalized $504,887
of
software development costs that have not yet been placed into
service
and upon which amortization has not yet begun. Tell us when these
costs were incurred, whether they relate to the ETSS or Rahaxi
system
software and when you intend to begin utilizing this software.

10. Tell us when you last performed an impairment analysis of your
capitalized software development assets and provide us with your
analysis.

Software License - Customer Relationships and Contracts, page 21

11. Clarify whether you are accounting for the BAS24 software
license
under SFAS No. 86 or SOP 98-1 and tell us the basis for your
selection of such policy.

12. Tell us more about the $2 million Customer Relationships and
Contracts that you included in your revised purchase price
allocation.  Tell us how you determined the fair value of this
asset
and the respective estimated useful life of ten years.  Identify
the
parties to these relationships and contracts and tell us the
general
terms of these agreements, including how you considered any
termination provisions.  Similarly provide us with your analysis
of
the facts that support the assignment of an estimated useful life
of
ten years for the software license.

13. We note your reference to an independent valuation here, and
elsewhere in the document.  We remind you that when such a
reference
is included in a filing in the 1933 Act environment you must
identify
the party and include the required consents in accordance with
Section 436(b) of Regulation C. Alternatively, you may remove the
references to independent valuations.

14. Also see the additional comments related to the Rahaxi
acquisition and the respective intangible assets under the heading
Goodwill and Note 2. Business Acquisitions, Rahaxi Processing OY,
below.

Goodwill, page 22

15. We note that during the year ended June 30, 2004 you revalued
certain of the intangible assets acquired in the Rahaxi
acquisition.
Please provide us with the analysis that led you to record these
adjustments and tell us the authoritative accounting literature
that
supports your revaluation.

Foreign Currency Translation Adjustment, page 24

16. Tell us your functional currency and how your selection meets
the
requirements of Appendix A of SFAS No. 52.

Note 2 - Business Acquisitions

Epaylatina, S.A., pages 26 and 27

17. Tell us the circumstances surrounding the dispute over the
6,667,000 shares  that were issued and later cancelled.  Tell us
how
you accounted for each issuance and cancellation of shares related
to
this transaction.  Clarify whether the Series A preferred shares
are
still convertible into common stock.

Rahaxi Processing Oy, pages 27and 28

18. With regard to the acquisition of Rahaxi Processing Oy, we
have
the following comments:

a. Disclosures on page 6 of your Form 10-K suggests that while you
acquired only 53% of Rahaxi on January 16, 2003, you consolidated
100% of Rahaxi as you "considered the transaction to be completed
as
of that date".  Clarify if and when you received the additional
34%
and 13% of Rahaxi shares, by identifying the dates you obtained
legal
title and voting rights associated with the Rahaxi shares.  Tell
us
the basis under generally accepted accounting principles for you
to
determine the acquisition date is January 16, 2003 for 100% of
Rahaxi.  Refer to paragraph 48 of SFAS 141.  Explain why you did
not
account for each acquired interest in Rahaxi as a step
acquisition,
since it appears you acquired shares of Rahaxi in a series of two
or
more transactions.

b. Tell us how you valued the shares issued as consideration and
tell
us how your methodology complies with EITF 99-12.

19. With regard to your purchase price allocation table on page
27,
we have the following comments:

a. The purchase price allocations presented on page 27 do not
foot.
It appears that you have included the value of the customer
relationships and contracts in the wrong columns.

b. Tell us what the valuation date was for the Rahaxi assets.
Since
you have suggested the acquisition date for all of Rahaxi was
January
16, 2003, we assume your valuation was as of that date.  Explain
whether you obtained valuations as of any other dates (for
example,
the dates you obtained the respective 34% and 13% of Rahaxi
shares).
Also, explain whether your revised purchase price allocation
(about
one year following the acquisition) considers any revised
amortization for that period.

c. Specifically explain the timing in which you recorded the
`adjustments` to the purchase price allocation.  Refer to the
specific authoritative literature under generally accepted
accounting
principles to support your accounting. Explain why the adjustments
to
the purchase price allocation do not represent a correction of an
error.

Transaxis, Inc., pages 28 and 29

20. With regard to the Transaxis transactions we have the
following
comments:

a. Provide us with a chronology of when you issued shares to
Transaxis and when Transaxis issued shares to you.  Clarify if and
when legal title to the respective shares you issued and received
occurred;

b. Explain how you accounted for the investment in Transaxis for
the
period during which you held approximately 43% of Transaxis common
shares.  Clarify if and whether you still hold shares of Transaxis
and if so, how you have accounted for them for the periods
presented.
Explain how you accounted for the termination of the acquisition.
Refer to the authoritative accounting literature that supports
your
accounting.

c. We note your disclosures that you believe you will recover the
3.2
million shares issued under the TA Acquisition Agreement.  Clarify
how you have accounted for these shares at issuance and how you
intend to account for them when you recover the shares.  Since it
appears that you have included these as a "shares cancellation
receivable", explain how you determined the amount pertaining to
these shares and the basis for such accounting and classification.
Your response should specifically address the accounting
literature
upon which your accounting is based.

Brown Simpson Settlement, pages 29 and 30

21. We note that you issued 5,183,418 shares of common stock to
Brown
Simpson on December 30, 2003 and that you cancelled the related
settlement agreement in June 2004.  Tell us how you accounted for
the
initial issuance of these shares and the subsequent cancellation
of
the Settlement Agreement.  Your disclosure indicates that "the
company cancelled the Brown Simpson Settlement Agreement" however,
it
is unclear whether the counterparty to the agreement also
cancelled
the agreement.  If not, explain why you believe you will receive
the
shares you issued to Brown Simpson.  Please clarify the basis for
you
to record a "share cancellation receivable", explain how you
determined the amount pertaining to these shares and refer to the
authoritative accounting literature that supports your accounting.

Unipay, Inc., page 30

22. With regard to the transactions with Unipay, Inc., we have the
following comments:

a. Tell us when you issued the 10 million shares to Unipay
shareholders, whether and when the title to the shares transferred
to
the Unipay shareholders and what percentage interest in Unipay you
held upon the issuance of these shares.

b. Tell us whether you continue to hold an interest in Unipay and
explain how you have accounted for your investment in Unipay for
the
period during which you held the investment.

c. We note your disclosures that you expect to recover the 10
million
shares issued under the Unipay transaction.  Clarify how you
intend
to account for them if you recover the shares.  Clarify whether
you
have included these as a "shares cancellation receivable", and if
so,
the basis for such accounting and classification. Your response
should specifically address the accounting literature upon which
your
accounting is based

Note 9 - Line of Credit and Notes Payable

Note Payable Settlement Agreement, pages 34 and 35

23. Tell us what consideration the lender group received for
entering
into a settlement agreement with the Company in March 2004.  It
appears that the group was required to return the 14.4 million
shares
to the president of the Company, however, it is unclear what the
lenders received in this settlement agreement.  Please explain.

24. Similarly, tell us what consideration the lender group
received
for returning an additional 1 million shares of stock to the
Company
and how your accounting for the return of these shares as a gain
is
appropriate.  Identify the relevant accounting guidance on which
your
accounting is based.  In this regard, treasury stock transactions
relate to the capital of the corporation and do not give rise to
corporate profits or losses.  Refer to ARB 43, Chapter 1.

25. Please identify the authoritative accounting literature that
supports your accounting for the forgiveness of amounts owed to
the
Company`s president as a gain.  In this regard, footnote 1 of APB
26
indicates that extinguishment transactions between related
entities
are capital transactions.

Note 12 - Equity Compensation Plans

Stock Incentive Plans, pages 36 and 37

26. Please explain the basis for the six month and one month
expected
option lives in your Black-Scholes models for 2004 and 2003,
respectively.

Note 13 - Warrants, pages 37 through 42

27. Tell us whether the shares underlying the warrants you have
issued are registered.  For each recipient who is a consultant,
tell
us the name of the person or entity to whom the warrants were
granted, the specific nature of the services provided and period
over
which the services were performed.  Justify the period of expense
recognition for these warrants to consultants and tell us how your
accounting complies with EITF 96-18.

Note 14 - Stockholders` Equity

Common Stock, pages 43 through 45

28. For all shares you have issued that were registered under Form
S-
8, tell us the name of the person or entity who received the
s