Discover 2010 Annual Report Download - page 14

In 2011, we will offer Discover Student Loans through Discover Bank, and during a transition period, CitiAssist®Loans
which are originated by Citibank, N.A. (“Citibank”) and subsequently purchased by Discover Bank. Our private student
loans are marketed through colleges and universities, including schools where Discover or Citibank 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 Citibank 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, both Discover Student Loans and CitiAssist Loans are certified with the school to confirm enrollment so
that loan funds are applied to educational expenses. 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 on the date of their graduation. 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.
Personal Loans
Our personal loans are unsecured loans with fixed interest rates, fixed terms and fixed payments. These loans are
primarily intended to help customers consolidate existing debt, although they can be used for other reasons. In addition to
the interest earned on the personal loans, we also earn fees from customers that enroll in our credit protection product.
We generally market our personal loan products to our existing credit card customers through direct mail, statement
inserts and email. However, we also market personal loans to non-Discover customers through direct mail. Customers can
submit their 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 who 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 business, 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 4,400
financial institutions with ATMs and point-of-sale (“POS”) terminals located throughout the United States. PULSE also
provides cash access at over 750,000 ATMs in over 80 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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