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Merger of Discover Financial Services and Pulse EFT Association Closes Following Pulse Member Approval
RIVERWOODS, Illinois and HOUSTON, Texas– January 12, 2005 – Discover Financial Services, a business unit of Morgan Stanley (NYSE:MWD), and PULSE EFT Association (PULSE) today announced the completion of their merger following approval of the merger agreement by PULSE's financial institution members.

The merger joins PULSE® and its 4,100 member banks, credit unions and savings institutions with Discover® Network and its 4 million merchant and cash access locations to create a new competitor in the electronic payments field.

“It's a new day in electronic payments,” said David W. Nelms, Chairman and Chief Executive Officer of Discover Financial Services. “We believe that the combination of PULSE's experience in debit and Discover's signature capabilities will enable us to offer additional choices in the important and growing debit market and offer a highly appealing alternative to serve financial institutions, merchants and consumers.”

“The approval of this agreement by PULSE's members demonstrates that financial institutions recognize the strong benefits of combining the PULSE and Discover networks to establish a new choice for electronic payment products and services,” said Stan Paur, PULSE President and Chief Executive Officer. “Our combined entity will be able to provide financial institutions of every size and type with a full-service debit platform and a comprehensive set of products, including credit, signature debit, PIN debit, gift card, stored value card and ATM services.”

PULSE is becoming a business unit of Discover Financial Services and is retaining its brand, pricing and operating platform as well as its management team, staff and Houston headquarters.

PULSE and Discover Financial Services are expected to offer new products later this year that utilize the strengths of both partners. The merger also establishes a strong foundation for expanding the reach of both networks.

“This partnership more than doubles Discover Financial Services' transaction volume and number of cards in the U.S. marketplace, forming what we believe is a solid platform for growth and providing us with a gateway to 4,100 financial institution partners,” Nelms added.

About Discover Financial Services
Discover Financial Services, a business unit of Morgan Stanley (NYSE:MWD), operates the Discover Card and the Discover Network for its more than 50 million Cardmembers. The Discover Network is the largest proprietary credit card network in the United States with more than 4 million merchant and cash access locations. For more information visit www.discovercard.com or www.discovernetwork.com.

About PULSE
PULSE is one of the nation's leading ATM/debit networks currently serving more than 4,100 banks, credit unions and savings institutions across the country. The network links an estimated 90 million cardholders with more than 250,000 ATMs and 3.3 million POS terminals at retail locations nationwide. In recent years, PULSE has become known as a valued resource for consumer research related to EFT services and an effective national voice on public policy issues relevant to the financial services industry. For more information, visit www.pulse-eft.com.

Howard Frazier Barker Elliott, Inc. acted as financial advisor to PULSE in the transaction.
Morgan Stanley acted as financial advisor to Discover Financial Services in the transaction.