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Discover Financial Services And China Unionpay Announce Strategic Alliance

May 26, 2005
Riverwoods, Illinois and Shanghai, China - May 26, 2005 – Discover Financial Services, Inc., a business unit of Morgan Stanley (NYSE:MWD) and owner of Discover® Network and PULSE® ATM/debit network, and China UnionPay (CUP), the only national bankcard association in China, today announced they have entered into a strategic alliance.

The two companies have signed a long-term agreement that will lead to acceptance of Discover Network Cards at China UnionPay ATMs and point-of-sale terminals in China and acceptance of China UnionPay cards on the PULSE network in the U.S. Both sides agreed to pursue ways to enable acceptance of China UnionPay cards at Discover Network's more than four million merchant and cash access locations in North America.

“We look forward to working with Discover Financial Services to expand customer convenience in North America and China,” said Wan Jianhua, President and CEO of China UnionPay. “There are over 800 million CUP cards and this alliance will make it possible for China UnionPay cardholders to use their cards while traveling in the U.S.”

Similarly, the agreement will enable Discover Network cardmembers to use their cards while traveling in China.

“This agreement will provide one of the world's largest card bases access to merchant locations and ATMs in the U.S.,” said David Nelms, Chairman and CEO of Discover Financial Services. “We're very excited about the benefits this relationship will bring to cardmembers, merchants and financial institutions.”

PULSE's financial institution participants and other ATM operators will benefit from the additional network volume China UnionPay cardholders will deliver as they conduct transactions at U.S. ATMs and point-of-sale terminals. In addition, merchants on the PULSE network will gain access to the new spending power from Chinese tourists using their China UnionPay cards in the U.S.

The agreement expands acceptance of Discover Network Cards to another destination market for U.S. travelers. Discover Network Cards are already accepted in other regions popular with U.S. tourists, such as the Caribbean, Mexico and Canada.

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About China UnionPay
China UnionPay (CUP) is the only bankcard association in China. There are over 800 million CUP cards. CUP started its international expansion by opening acceptance of CUP cards in Hong Kong in January 2004, Macao in September 2004, Singapore, Thailand and South Korea in January 2005. www.chinaunionpay.com/englishversion


About Discover Financial Services
Discover Financial Services, Inc., a business unit of Morgan Stanley (NYSE:MWD), operates the Discover® Card with more than 50 million Cardmembers, the Discover® Network with more than 4 million merchant and cash access locations and the PULSE® ATM/debit network currently serving more than 4,100 banks, credit unions and savings institutions. For more information, visit www.discovercard.com, www.discovernetwork.com or www.pulse-eft.com.

CONTACT:
Jennifer Kang
Discover Financial Services, Inc.
(224) 405-2347

Jeffrey X. Huang
China UnionPay
86-21-61006508