Discover 2011 Annual Report Download - page 15

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We currently have two types of variable rate private student loans: (i) Discover student loans through Discover Bank;
and (ii) for a transition period after our acquisition of SLC, CitiAssist® loans, which are originated by Citi, and subsequently
purchased by Discover Bank. Our private student loans are marketed through colleges and universities, including schools
where Discover or Citi is named a preferred lender. Discover student loans and CitiAssist loans are also marketed online and
through direct mail. In addition, CitiAssist loans are marketed through marketing agreements with Citi and its affiliates.
Customers can apply for a Discover student loan by mail, online or by phone, where we have dedicated staff within our
Discover call centers to service student loans. Customers can apply for a CitiAssist loan online. As part of the loan approval
process, virtually all Discover student loans and CitiAssist loans are certified with the school to ensure students do not take on
more private student loans than they need. To ensure proper use of loan funds, the majority of loan disbursements are made
directly to schools. Upon graduation, Discover student loan borrowers are generally eligible to receive a graduation reward.
Students may redeem their graduation reward as a credit to the balance of their student loan or as a direct deposit to a bank
account. To encourage responsible credit management, certain CitiAssist loans are eligible for interest rate reductions after the
borrower has made a specified number of on-time payments. Discover student loan and CitiAssist loan borrowers can also take
advantage of an interest rate reduction when they enroll in recurring automatic payments.
Personal Loans
Our personal loans are unsecured loans with fixed interest rates, terms and payments. These loans are primarily intended
to help customers consolidate existing debt, although they can be used for other reasons. In addition to interest earned on
personal loans, we also earn fees from personal loan customers who enroll in our credit protection product. We generally
market personal loans to our existing credit card customers through direct mail, statement inserts and email. We also market
personal loans to non-Discover customers through direct mail. Customers can submit applications via phone, online or through
the mail, and can service their accounts online or by phone.
Deposit Products
We obtain deposits from consumers directly or through affinity relationships (“direct-to-consumer deposits”) and
through third-party securities brokerage firms that offer our deposits to their customers (“brokered deposits”). Our deposit
products include certificates of deposit, money market accounts, online savings accounts and Individual Retirement Account
(“IRA”) certificates of deposit.
We market our direct-to-consumer deposit products to our existing customer base and other prospective customers
through the use of internet advertising, print materials and affinity arrangements with third parties. Customers can apply for,
fund and service their deposit accounts online or via phone, where we have a dedicated staff within our call centers to service
deposit accounts. For more information regarding our deposit products, see “Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources - Funding Sources - Deposits.”
Payment Services
PULSE Network
Our PULSE network is one of the nation’s leading ATM/debit networks. PULSE links cardholders of more than 6,300
financial institutions with ATMs and point-of-sale (“POS”) terminals located throughout the United States. This includes 4,300
financial institutions with which PULSE has direct relationships and more than 2,000 additional financial institutions through
agreements PULSE has with other debit networks. PULSE also provides cash access at more than 800,000 ATMs in 100
countries.
PULSE's primary source of revenue is transaction fees charged for switching and settling ATM, personal identification
number ("PIN") POS debit and signature debit transactions initiated through the use of debit cards issued by participating
financial institutions. In addition, PULSE offers a variety of optional products and services that produce income for the
network, including signature debit processing, prepaid card processing, and connections to other regional and national
electronic funds transfer networks.
When a financial institution joins the PULSE network, debit cards issued by that institution can be used at all of the
ATMs and PIN POS debit terminals that participate in the PULSE network, and the PULSE mark can be used on that
institution's debit cards and ATMs. In addition, financial institution participants may sponsor merchants, direct processors and
independent sales organizations to participate in the PULSE PIN POS and ATM debit service. A participating financial
institution assumes liability for transactions initiated through the use of debit cards issued by that institution, as well as for
ensuring compliance with PULSE's operating rules and policies applicable to that institution's debit cards, ATMs and, if
applicable, sponsored merchants, direct processors and independent sales organizations.
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