May 5, 2006



Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-0406

Attention: Barbara C. Jacobs, Assistant Director
           Maryse Mills-Apenteng, Division of Corporate Finance
           Marc Shuman, Division of Corporate Finance

           Re: Direct Insite Corp.
               Registration Statement on Form SB-2
               Amendment No. 1 filed on December 8, 2005
               File No. 333-128039

               Form 10-KSB for the year ended December 31, 2004
               Form 10-QSB for the periods ended March 31 and June 30, 2005
               File No. 0-20660

Ladies and Gentlemen:

     Following are our responses,  including  supplemental  information,  to the
comments of the Securities and Exchange  Commission (the "SEC") set forth in its
letter  dated  January 3, 2006 with  respect to the  above-referenced  documents
filed by Direct Insite Corp.  (the "Company" or "Direct  Insite").  Supplemental
information  provided  to you in this  letter is based upon  information  and/or
documentation  provided by the Company.  The numbers of the Company's  responses
parallel the numbers in your January 3, 2005 comment letter. . Since the Company
has now filed  its Form  10KSB  for the year  ended  December  31,  2005,  which
incorporates  the  Staffs'  comments,  we have not  amended  any  prior  '34 Act
filings.





Securities and Exchange Commission
May 5, 2006
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Form SB-2
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General
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1. The Company has removed the interest shares from the registration statement..

Item 8A.  Controls and Procedures, page __
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2. The Company has revised the disclosure regarding the conclusions of its Board
of  Directors  as now set forth in its  recently  filed  Form 10KSB for the year
ended December 31, 2005.

Notes to Consolidated Financial Statements
- ------------------------------------------
Note 2 - Significant Accounting Policies
- ----------------------------------------
Revenue Recognition, page F-9
- -----------------------------

     In response to the Staff's  comment as it relates to the Company's  revenue
     recognition  process and SOP 81-1,  the Company  recognizes  revenue in two
     categories,  Application  Service  Provider  ("ASP")  Services  and  Custom
     Engineering  Services.   Each  of  these  arrangements  is  under  separate
     contracts and is viewed as separate profit centers.

     ASP Services  consists of data processing  using the Company's ASP software
     solution in the form of on line presentment of customers' invoices to their
     customers  and payment  systems  (Invoice  Online or IOL).  The customer is
     charged a fixed  rate on a per use basis or a fixed  fee is  determined  by
     estimated monthly invoice presentment volumes based on contractually agreed
     upon terms ( with no adjustment for under/over  usage).  These arrangements
     are on a stand alone basis and are not bundled or part of multiple  element
     arrangements.   There  are  no  licensing  arrangements  of  the  Company's
     proprietary software solution and title to the solutions is not transferred
     to the Company's  customers.  Revenue from these  services is recognized in
     the period the service is provided.  As noted in our previous response,  in
     ASP service  arrangements  the  customer  has no  contractual  right to the
     software.  SOP 97-2  states in  paragraph  66,  "Revenue  allocated  to the
     service element should be recognized as the services are provided or, if no
     pattern of pattern of performance is discernable,  on a straight-line basis
     over the period  during  which the services  are  performed.  As such these
     revenues are not recognized pursuant to SOP 81-1.

     Custom Engineering  involves modifying the base IOL solution to meet custom
     specifications and or additional  functionality  requirements of customers.
     This work is performed  pursuant to separate  contracts or agreements  with
     customers for each customization  project and is separate and distinct from
     the ASP Services.  These  customization  services  have  specific  required


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May 5, 2006
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     deliverables. These types of arrangements vary in size, term and complexity
     on a project by project basis. The Company evidences the achievement of its
     contractual  deliverable  through the form of customer  acceptance.  It has
     been the Company's policy to recognize revenue upon the receipt of customer
     acceptance of achieving these  contractual  milestones at the lesser of the
     milestone amount or the percentage of completion of the contract.

     SOP 97-2  paragraph 7 states "if an  arrangement  to deliver  software or a
     software system, either alone or together requires significant  production,
     modification,  or customization of software,  the entire arrangement should
     be accounted for in conformity with Accounting  Research  Bulletin (ARB) No
     45,  Long-Term  Construction-Type  Contracts,  using the relevant  guidance
     herein and in SOP 81-1, Accounting for Performance of Construction-Type and
     Certain Production-Type Contracts." SOP 97-2 goes on in paragraphs 63-65 to
     state that "Certain arrangements include both software and service elements
     (other than PCS- related  services).  The  services  may include  training,
     installation,   or   consulting.    Consulting   services   often   include
     implementation   support,   software   design   or   development,   or  the
     customization or modification of the licensed software.

If an arrangement  includes such services,  a  determination  must be made as to
whether the service  element can be accounted for separately as the services are
performed. Paragraph 65 discusses the criteria that must be considered in making
such a  determination.  If the nature of the  services  is such that the service
element  does  not  qualify  for  separate  accounting  as a  service,  contract
accounting must be applied to both the software and service elements included in
the arrangement. Paragraphs 74 through 91 of this SOP address the application of
contract  accounting  to  software  arrangements.  Paragraph  74  states  "If an
arrangement to deliver software or a software  system,  either alone or together
with other products or services, requires significant production,  modification,
or customization of software, the service element does not meet the criteria for
separate  accounting set forth in paragraph 65. The entire arrangement should be
accounted for in conformity  with RB No. 45, using the relevant  guidance in SOP
81-1"

In order to account  separately for the service  element of an arrangement  that
includes  both  software  and  services,  sufficient  vendor-specific  objective
evidence  of fair value must exist to permit  allocation  of the  revenue to the
various  elements of the  arrangement  (as  discussed in  paragraphs 10 and 12).
Additionally, the services (a) must not be essential to the functionality of any
other element of the  transaction and (b) must be described in the contract such
that the total price of the arrangement  would be expected to vary as the result
of the inclusion or exclusion of the services."

Paragraph  69  goes  on  further  to  state   "Software   should  be  considered


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May 5, 2006
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off-the-shelf  software if it can be added to an arrangement with  insignificant
changes  in the  underlying  code and it could be used by the  customer  for the
customer's   purposes  upon  installation.   Actual  use  by  the  customer  and
performance of other elements of the  arrangement is not required to demonstrate
that  the  customer  could  use  the  software  off-the-shelf.   If  significant
modifications or additions to the  off-the-shelf  software are necessary to meet
the  customer's  purpose  (for  example,  changing  or making  additions  to the
software,  or  because  it would not be usable in its  off-the-shelf  form in he
customer's  environment),  the software  should be considered  core software for
purposes  of  that  arrangement.  If  the  software  that  is  included  in  the
arrangement is not considered to be  off-the-shelf  software,  or if significant
modifications or additions to the  off-the-shelf  software are necessary to meet
the customer's  functionality,  no element of the arrangement  would qualify for
accounting as a service,  and contract  accounting should be applied to both the
software and service elements of the arrangement."

The Company's custom engineering engagements are single contractual arrangements
involving  significant  modification  or  customization  of  the  Company's  own
propriety  software  that is not purchased by the customer but rather used in an
ASP arrangement.  The  customization  work must be completed in order to use the
Company's IOL in an ASP environment.  Again, the ASP and Customization  Services
are services  entered into under separate  contract whose amounts are determined
using vendor-specific evidence and as such are accounted for separately. As such
the  Company  believes  that  it  is  appropriate  to  account  for  its  Custom
Engineering  Services (and Custom  Engineering  only) using contract  accounting
following the guidance issued under SOP 81-1.

Form 10-QSB For The Fiscal Quarter Ended September 30, 2005
- -----------------------------------------------------------

3. The Company has revised the  disclosure to comply with the guidance set forth
in item 308(c) of  Regulation  S-B as now set forth in its  recently  filed Form
10KSB for the year ended  December 31, 2005. The revised  disclosure  states the
following:

     "Since the date of the most recent  evaluation  of the  Company's  internal
     controls by the Chief  Executive and Chief Financial  Officers,  there have
     been no  changes  in such  controls  or in other  factors  that  could have
     materially  affected,  or is reasonably likely to materially affect,  those
     controls,  including  any  corrective  actions  with regard to  significant
     deficiencies and material weaknesses."



Securities and Exchange Commission
May 5, 2006
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     Please  call me at (516)  433-1200  if you have any  questions  you wish to
discuss with us concerning this letter or any of the enclosed materials.

                                    Very truly yours,


                                    /s/ David H. Lieberman
                                        David H. Lieberman


cc: Michael J. Beecher
    Chief Financial Officer
    and Secretary