During a ceremony this morning at the famous Macy's Herald Square in New York City, Liu Tinghuan, Chairman of China UnionPay, and Su Ning, Deputy Governor of the People's Bank of China, purchased a necktie with a card issued in China marking the first-ever acceptance of a China UnionPay bankcard in the U.S. This transaction today marks the beginning of acceptance of China UnionPay cards on the PULSE network. It was also the first milestone resulting from a strategic agreement between China UnionPay, China's only national bankcard payment network, and Discover Financial Services LLC, a business unit of Morgan Stanley (NYSE:MWD) and owner of the Discover Network and the PULSE ATM/debit network.

Wan Jianhua, President and CEO of China UnionPay, said: "It is our objective to provide convenient and safe payment service to CUP cardholders when they travel abroad. The acceptance of CUP cards in the U.S. is a starting point from which both parties will complement each other and develop together in concert to raise the strategic cooperation to a new level."

David Nelms, Chairman and CEO of Discover Financial Services, said: "This strategic alliance between China UnionPay and Discover Financial Services expands the links between the growing Chinese consumer economy and the U.S. market. It will create new opportunities for merchants, financial institutions and other ATM owners by enabling them to serve Chinese travelers - the fastest-growing segment of the U.S. tourism market. We look forward to next year, when we expect Discover Network cardholders will be able to use their cards at China UnionPay locations throughout China."

"This agreement opens the door for merchants on the PULSE network to the purchasing power of Chinese tourists," said Stan Paur, President and CEO of PULSE. "More than 360,000 Chinese travelers will visit the U.S. in 2005, with double-digit growth rates projected ahead. PULSE's financial institution participants and other ATM operators can expect to benefit from additional network volume as China UnionPay cardholders conduct transactions at U.S. ATMs and point-of-sale terminals."

Expansion of Groundbreaking China UnionPay/Discover Alliance Anticipated

Acceptance of China UnionPay cards on the PULSE network throughout the U.S. marks the first phase of a long-term agreement signed in May 2005 by the companies. The next step will be to complete arrangements for Discover Network cards to be accepted at China UnionPay's network of more than 365,000 merchant locations and 80,000 ATMs in China. Both companies are continuing to work toward acceptance of China UnionPay cards at Discover Network's more than 4 million merchant and cash access locations in North America.

Discover Network cards are already accepted in other regions popular with U.S. tourists, such as the Caribbean, Mexico and Canada, and the alliance with China UnionPay will add another important region of the world that is rapidly growing in popularity with travelers.