After more than two years of talking about marketing credit cards abroad, Morgan Stanley Dean Witter & Co. is entering the United Kingdom, not with its flagship Discover card, but with its own investment banking brand.

Industry watchers find this puzzling, in view of the investment made in Discover.

They were also intrigued to learn that the New York-based company will put the MasterCard logo on the foreign cards. MasterCard International Inc. is licensing its brand to a bank chartered by Morgan Stanley Dean Witter earlier this year.

"We have invested 14 years building Discover into a major brand," said Will O'Hara, managing director of Morgan Stanley Dean Witter card services in the United Kingdom. "The reality is, though, once you leave the shores of the United States, Morgan Stanley Dean Witter is not known and Discover is not known."

Given the limited options for building a presence abroad, Mr. O'Hara said, the company decided to use the card venture as a launching pad for building Morgan Stanley Dean Witter into a global consumer brand.

By teaming with MasterCard, London-based Morgan Stanley Dean Witter Bank Ltd. can achieve in Europe what the Discover card's owners tried in vain for years to accomplish in the United States. Before it merged with Morgan Stanley & Co., Dean Witter initiated a costly, lengthy, and unsuccessful legal battle against Visa U.S.A., which refused to allow it to become a Visa-issuing member. Both Visa U.S.A. and MasterCard have rules preventing U.S. members from forming partnerships with American Express Co. and Discover, but those prohibitions do not exist abroad.

In the United States, the Discover organization, Discover Financial Services in Riverwoods, Ill., independently built a network of merchants that take its card under the Novus acceptance mark. Discover has perennially lagged American Express Co., Visa, and MasterCard in numbers of card-accepting merchants.

Lacking a Novus infrastructure overseas, Discover opted to ride on MasterCard and its Europay affiliate.

Though the Morgan Stanley Dean Witter credit card will be accepted at all MasterCard locations -- even those in the United States -- Discover's 47 million U.S. cardholders will still not have MasterCard network access. They will be restricted to stores that subscribe to the Novus network.

The British incarnation of the card, scheduled to hit the market in September, will feature a "cashback rewards" program analogous to Discover's, which pays rebates pegged to the value of goods that cardholders charge.

The company said it plans to roll out the Morgan Stanley Dean Witter card in other markets, but would not be more specific. Mark C. Alpert, an analyst at Deutsche Banc Alex. Brown, said the next countries would be Italy and Spain within the next six months.

Among the industry experts questioning the branding strategy was credit card lawyer Anita Boomstein. "I would have anticipated that they would have wanted to extend the Discover card brand," said Ms. Boomstein, a partner in the New York law firm Hughes Hubbard & Reed.

"The big weakness of Discover is that it can't be used outside the U.S.," Mr. Alpert said. The U.K. initiative "doesn't solve this."

In April, Discover began a major initiative to add merchants to its network. Part of this strategy involves a campaign aimed at undermining Visa and MasterCard in the merchant community by touting Discover's lower merchant fees. At industry conferences and in letters to merchants, David W. Nelms, president of Discover Financial Services, has lambasted Visa, MasterCard, and their banks for "nickel and diming" retailers.

Yet Discover's international card strategy depends on the contractual good will of MasterCard. "We have a relationship with MasterCard over here," Mr. O'Hara said. "Where it goes from here is anyone's guess."

MasterCard declined to comment on whether this arrangement could lead to a similar partnership in the United States. MasterCard spokesman David Ruth said, "In Europe, they (Discover) do not own, manage, participate in a program competitive with MasterCard."

This is not the first time that Discover has cut a deal with MasterCard. After its failed attempt to gain membership in Visa, Discover introduced a cobranded MasterCard product in 1994 called Prime Option. NationsBank Corp. -- now Bank of America Corp. -- issued the card, while Discover earned fee revenue.

Prime Option petered out, and Household International Inc. bought the portfolio in April 1998. At the time, the arrangement was controversial, and MasterCard was accused of allowing a competitor into the bank card association world.

Mr. Nelms joined Discover a year ago from MBNA Corp., where he was responsible for introducing credit cards in the United Kingdom.

The introduction of the Morgan Stanley MasterCard will be accompanied by a "marketing blitz" in all forms of media, Mr. O'Hara said. There are no plans for other retail banking products, though it already does some institutional lending, Mr. O'Hara said.

Nor are there any plans to import the Novus acceptance mark, Mr. O'Hara said. "We are trying to leverage the Morgan Stanley Dean Witter" name.

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