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Why Xbox Live Doesn't Take Exact Change
With ever-more tempting content on Xbox Live (like the awesome Exit), it's really frustrating to have to 'overpay' and buy Points in bulk. 1up got an official response from Xbox 360 group product manager Aaron Greenberg on that issue, explaining why the service always leaves you with a little bit left over: "The reason why we do that, the core reason, is around credit card transaction fees ... If we do this in bulk, we don't have to burden the consumer with the transaction fees, or ourselves or publishers. It's about keeping infrastructure costs down and I know sometimes it's frustrating because you end up with odd points, but we don't have any plans to change that." Greenberg also addressed why the service limits you to 100 friends on your friends list.
i think the difference is in not doing something because it's right vs. doing something because it's so small that 99% of people out there won't notice.
it's like mail-in rebates.... i've worked at a fortune 50 computer company, and the exact to the tenth of a penny cost of rebates have already been factored into every budget up through the supply chain.
they're so immutable as to never even be questioned.
"We make more money this way."
What a load of PR crap! We know why you can only "buy in bulk", it's because very few things on XBL come out in 500 point increments. You almost always buy more than you need, but then next time if you're 20 points short for what you want to purchase, you get more and have a 480 point surplus. It's obviously specifically designed to be a vicious cycle of always having either too much or being just short.
The iTunes store doesn't have an issue selling me downloads a buck at a time, obviously the credit card fees aren't breaking their balls. WTF Microsoft?
I don't know why the number was set, but it will never change because every game would start crashing. Sorry!
I believe the reason they do this is the same reason when you go to a carnival you have to buy tickets for a ride. So you never really know how much things cost. After all if it was just about making bulk payments easier then the price of things would match those bulk costs. Basically you'll always end up with change and figure you might as well buy so more so you can get rid of your leftover. All in all I hate the system.
Live has the worst online transaction set up of all three. The PSN and Wii networks are 3 clicks to remove your CC. The live network is a 30 minute call followed by a 30 day delay to unhook your Credit Card from your xbox /360. They require passwords, emails used, gamer tag, you CC#, and it's expiry date. It's asinine. You may replace your card more easily but to actually remove one requires too many hoops to jump. Where as the PSN and Wii allow you to simply remove it form the account without needing to call, and it's removed instantly. They actually required me to speak with a call center manager to remove my card. After that I will not consider buying anything from the live network again. No membership, no games, nothing.
"There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy."
>>dithadder
"XBL customers are undoubtedly paying more by making thousands of interest-free microloans to Microsoft than they are saving by not paying "burdensome" transaction fees...."
This is an interesting theory. The question it has me asking is just how many unspent points is Microsoft holding on to?
Say there are 2.5 millions users with 160 points left over ($2.00). That 5 million for Microsoft. Plus having some extra unspendable cash in someones account makes then more likely to add a few bucks to buy something else. Then they have change left over again, rinse, repeat.
Wow, the first two replies were both idiotic.
You do know that credit card companies charge a minimum fee for each transaction, right? Microsoft can't let people do micropayments of $1 with a credit card because the credit card companies will turn around and charge Microsoft MORE than $1 to cover that transaction.
This is one of several reasons that I avoid buying any retail goods with a credit card. You pay the same price as you would pay in cash, but the credit card companies gouge the merchant for a chunk of the profits. I would rather see the merchant make that profit since they are the ones selling me the thing I want, so I pay cash.
Its also the same reason that most places have a minimum purchase amount of a few dollars, if you use a credit card. Otherwise it will cost them more to process the transaction than you actually paid for your purchase.
OK, I'll accept that. The Wii works the same way, after all. Now how about telling me why you can't peg points to the currency like Nintendo does with the Wii? Why is it that MS points are 80 for $1 in the US? Why the weird exchange rate? Why can't it be 100:$1 like the Wii? Or at least something I can do math with easier, like 25:$1?
Comment forecast: Bits of genius surrounded by a sea of mediocrity.
M$ lies again. Is anyone surprised anymore?
is why there's no 1-to-1 correspondence with dollars or euros or fcking rupees for all I care. Beyond obscuring the cost, the exchange rate seems deliberately chosen to make things seem cheaper than they are.
That said, we're talking about a grand total of a few bucks here. I put more stock in the whining about paying for online access.
Full disclosure: I am a XBL subscriber and I want new rock band songs!
Every interest cycle that has them keeping more of your pennies means more interest in their pocket. And if you have enough of these copper babies, they add up, and so does their interest. Sure, they'll have to 'pay' out the content eventually, but meanwhile they are the ones collecting the interest, not you.
By the way, this is the same reason the Fed's are quite happy to help you over-estimate your income tax burden when you prepay.
Many many many retail establishments prohibit you from making credit card purchases under $5 because they actually lose money on the transaction thanks to fees. Nintendo does the exact same thing with Wii Points, except you can't purchase those through your console, which allows a greater freedom for input when purchasing online, though I'm sure there's a minimum. The alternative is to raise prices, or using a horrifying shopping-cart type system which users would abhor.
I hate it when stores use transaction fees as an excuse for not accepting credit cards (or creating artificial minimums). I can't tell you how many times I'd eat the fee and buy something, but walked away instead because that wasn't an option.
I'm fairly confident the real reason they don't allow small increments is the same reason they use points -- to obscure the real cost from the consumer. As an engineer I have virtually no background in physcology, but I can say from personal experience, it's easier to spend 1000 points than $5 (even when the value of points is much greater than the dollar amount). I'm also confident that designing the system so it's easy to end up with an odd amount of points that requires a bulk purchase to do anything again was intentional (eg. I have 200 Wii points right now and the cheapest purchase is 500).
Sadly, PS/2 was yet another victim of USB, which doesn't care what you plug into it, the electrical slut.
Yeah, similarly to the question of:
Why are the Nintendo VC games so overpriced, or the Wii points.
Seriously, with great things as Emulators and torrents I do not understand why do they sell games at £7 each!
Ubuntu is an African word meaning 'I can't configure Debian'
... getting people to pay for stuff they won't use. There are entire industries centered on exploiting this concept, most notably the prepaid calling card market. You pay for $20 and get $17 worth of product, and you can't use the remaining $3 for anything, so the company makes extra money on you. You see it everywhere... reward points on credit cards, etc.
http://en.wikipedia.org/wiki/Breakage_(accounting)
rooooar
Credit card processors charge you a per transaction fee. That is just how it work, that is how they make money. Every time you accept money, regardless of the amount, on a card they charge you. That's why you'll find restaurants with things like "$5 minimum credit card purchase." At a certain point you literally don't make any money on a transaction because the fee eats it all up.
So, suppose MS allowed you to buy points in arbitrarily small amounts. This is going to decrease the amount they make because people will do it. There will even be transactions (like people buying 1 point) that they lose money on. This means they have three choices:
1) Make less money. They aren't going to pick this. XBL is not run as a public service, they are in this to make money. As a practical matter they need a net profit here to help offset the costs of the Xbox hardware.
2) Pass the costs on to their developers in the form of lower payments. Bad option, you don't pay enough, people just won't develop for XBL.
3) Pass the cost on to the consumer. This is what would happen.
It is the same problem with micro-payments you've seen elsewhere. If you want to have small payment increments, credit card fees can kill that. This is one solution to the problem. Maybe not the best solution, but then if you've got a better one perhaps you should propose it to them? "Just eat the fees and make less money," isn't a solution.
Please remember: If you disagree with their business model, you are free to not buy their products. The Xbox in general, and certainly XBL and the marketplace, are not necessary to life. You can just not play their game if it is unacceptable to you.
Which is a nice little side benefit.
If I look at the US itunes store, I can immediately see that I am paying about 50% more for music compared to the US, as the standard track price in AU is $1.69
If I look at the cost of items on Xbox Live AU compared to the US (I believe that) the point costs are the same.
I know it works this way with the Wii, and the AU price conversion for cash -> Wii points is $1.50 -> 100 and the US one is of course $1USD -> 100, and the japanese one is 100JPY -> 100.
And of course the AU dollar hasn't been below 0.75USD since the Wii was released, and has typically been in the high 80s. And it certainly hasn't been below 90JPY since the Wii was released, but more people who ever see another countries store will see the same point cost, and think "Oh, they are paying the same prices"
At least you don't work in the recreational marine industry. ITT/Jabsco reports over 60% compliance with their rebates (sadly I have no reference other than several reps word) Garmin, Raymarine, and Dometic report similar values. Across all retail the value is around 10% or less.
Phil
Laugh, it's good for you!
it would only equal a dollar in one goddamn market.
They charge different amounts for points in different markets, so that the prices in points of all items can remain the same across the system.
While I love the Virtual Console, the bulk points system is broken. It's deliberately setup so that you always either have too few or too many points. For example, I bought 1,000 points. I grabbed the Opera Browser for 500 and then was going to get Super Mario Bros. - The Lost Levels with the other 500. It turns out that The Lost Levels cost 600, as opposed to the 500 that every other NES game does. This is probably due to it kinda-sorta being an import, but still ridiculous. So I think, "no problem, I'll just get 1,000 more points and then grab an N64 game as well". That was before I realized that Pokemon Snap is 1,000 points in itself. This puts me in an awkward spot. I have 500 points sitting around right now and would like to get The Lost Levels. To do so I need only 100 more points. I can only get a minimum of 1,000 at a time however, so I'd be left with 900 points at best. Unless I spend that on some crappy NeoGeo game, I'll be left with spare points forever! I'd much rather just buy the titles themselves, not bulk points that will hopefully even out in a purchase.
"He who can destroy a thing, controls a thing." --Paul Atreides, Dune
It's the Devil running the show....
Misery loves company. Online misery loves unsuspecting random strangers.
The idea behind something like this is to be able to charge less than you would with a normal credit card transaction, the whole micro payment idea. If you make everything a CC purchase then those fees get factored in and you discover that things cost more, and there aren't things available for really cheap.
As an example: Suppose you offer something for download from your site. You want to try to recoup bandwidth costs, which you calculate to be about 2 cents per DL. So you charge people for it. No big deal, it is a tiny amount of money, most people shouldn't have a problem. It is a micro payment.
However, you discover that every time you take a credit card, you get hit with a 40 cent fee, on top of the money you already pay for the CC processing. It actually COSTS you money to charge people 2 cents. So you have to up your price to cover the transaction fee, the service fee and the money you want to make. All of a sudden, your downloads aren't so cheap. Your idea of micro payments goes away, because it just costs too much. You either have to go to free and eat the costs, or start charging a lot more than you want to.
Well a points network like they do on XBL allows for the mitigation of that. There are way less CC fees since there are less transactions. You can make micropayments and not get screwed over. MS just adds up the amount of points spent to a given source and cuts them a check for that much.
As such it keeps costs down on the individual items. If you start doing the CC transaction per thing, that fee is going to get figured in and will hit you in the form of increased costs. On higher dollar items, it probably won't change anything, but on smaller stuff it'll show up. Things will be $2.50 (or more likley $3.00) instead of $2.00.
Do some research in to it and you'll find that the whole CC transaction fee has been a real problem for micro payments and merchants have been mulling what to do about it for a long time. There's a market for cheap stuff online, but it is hard to make it cheap enough when you get bled dry by transaction fees. A points system like this is one solution to the problem. Perhaps not the ideal one, but I've yet to hear a better one.
It's even worse than the Wii's point system because MS points don't map to easily divisible dollar amounts. I believe 800 points equals $10, which isn't difficult math but certainly isn't as easy as they could've made it. Contrast that to the Wii, where a point equals a penny, which the aforementioned 800 points would be a much more quickly to see $8. Sony does one better and just has you pay in actual currency.
The whole system is set up to deceive the consumer
This isn't Microsoft's only (IMHO) deceitful money grab on the xbox 360. If you want rechargable controllers, that's an extra $20, making them $70 compared to $50 for a Sony Sixaxis (the stock controller for the system). Want wireless Internet? Extra $90-$100. Want to play online? Extra $50 per year.
Granted, Live's service is currently superior to Sony's, but I don't know if it is $50/year superior. You can argue the 360 controller is better out-of-the-box because it has rumble, but I'm just talking about the stock hardware that is currently available - it's not like Sony is excluding rumble from some sticks and not others to do some price differentiation. And I left out the extra cost on the 360 if you are interested in high-def movies - it's fine they left it optional but I think the HDDVD add-on is overpriced as well.
My main point is that at some point it becomes disingenuous to claim Microsoft is providing better or even similar value to its primary competitor.
Disclaimer: I own a PS3, xbox360, and a Wii.
Why do hot dogs come 10 to a pack, but the buns come 8 to a pack?
I always end up with leftover buns or dogs, forcing my to buy more, over and over!
It's a conspiracy!
http://www.straightdope.com/classics/a2_350.html
There's a whole mess of issues that come with that. In the case of the gold service it is payment up front for service. You give them your money, you get service for a month. It's all paid ahead of time. You choose not to give them money next month, that's ok, they already got money for what you used.
What you are talking about reverses it though. You get the items (or rather the bits) first, then only later do you have to pay for them. Same system as a credit card, buy now, pay later. Ok fair enough but there's a host of issues (including legal) that come with that and you can understand why MS would not be interested in getting in to that.
A simple one would be the one faced by every creditor of what happens if people exercise the credit and then fail to pay? What do you do then? I'm not going to cover all the situations, you can look it up yourself, however in MS's case collections could become an interesting problem. With a physical good there's the ability to get a court order to get the good back. Can't really do that with bits so easy.
It would also probably make it extremely more complicated to get an XBL account. Every service I have that extends me credit in some way, I had to jump through some hoops to get. For my credit cards, they needed a background check and an agreement to a contract. For my natural gas service, they wanted a deposit (and not a small one) for a year while I proved my payment history with them. My mortgage, well we won't even get in to all the crap that entails.
That isn't what you want for a service like XBL. You don't want to have to have a credit check or have to put down a $100 deposit. However, that is what it would entail if they did as you suggested and extended credit.
They could allow you to have a larger friends list on Live, and allow you to define which of that larger set would be visible for any given day...
Thus allowing you to have different groups for different kinds of games you were currently interested in.
Or, they could have one user called "other" that they could proxy in messages from friends not in the "100" to you through.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
So, some joker typed in a made-up email address on his xbox live account.
I now get spammed regularly by microsoft, and their internal abuse mailbox is behind a filter that rejects all mail from me as "obscene". (Apparently this is moderately widespread; it's quite easy to be on a Class C shared with someone else who spammed them once, and they have no procedure for getting unblocked from Microsoft; Hotmail actually does, but Microsoft proper doesn't.) So I can't complain about the unwanted mailings...
Sheesh. Whoever it is, I hope he realizes Microsoft is happily sending his personal information to me regularly.
My blog: http://www.seebs.net/log/ --- My iPhone/iPad app: http://www.seebs.net/seebsfrac/
It's the same scam as hot dogs come in packages of ten, and buns in packages of eight.
John Walsh once found me while looking for some other kid. He was not amused.
Simply put, Sony's PlayStation Network doesn't do this. The minimum is a $5.00 charge, but it's exact change above that.
1) You have a wallet.
2) If you don't have enough money in the wallet, and it will take less than $5.00 to cover, then you will be charged $5.00.
3) If the balance is $5.00 or greater, you will be charged exactly that amount.
You will always have less than $5.00 in your wallet, or most times $0.00 in your wallet as I have personally found.
If Sony can do this, why can't Microsoft?
Get used to it, this is the future of computing.
Soon you will not own your applications, you will rent them from a service provider. Get used to paying for word / photoshop by the minute or by the hour.
After that, you will not own your computer, you will rent CPU and Application time from a service provider. Get used to paying for CPU time and application usage.
Think it won't work? You are already doing it for cellphones. You don't own your phone, or any of the applications ON your phone, or even the data.
And finally, be prepared to pay for storage too, no need to back-up, let a service provider do it FOR you.
The X-BOX subscription service is basically a test vehicle for seeing exactly how much the market will bear. Cellphones have already proven the model works.
If thats the reason then they should make a minimum transaction rather then tiers
Its pretty much any company that sells "gift cards", they're basically pre-paid credit cards. Give Best Buy $50 now, get your "money" back in the form of merchandise in the future. Lost the card(s)? Sucks to be you! Accountants love these things cause you KNOW companies are just sitting on millions of dollars worth of these in their account books.
There are a couple of reasons for this. Most are mentioned elsewhere, so I'm not going into details.
1. Is the per-transaction fee with the merchants, they don't want to do a bunch of tiny transactions and eat fees.
2. Breakage, every point on used in the system is excess profit.
3. Increase spending - companies found that the majority of gift card receivers spent MORE than the card was for. Makes sense, if you get a gift card for $25, and decide between $20 and $30 items, your choice is "lose" $5 and get the $20, or spend $5 and get the $30 to use all the value... that's why they push gift cards for the holidays.
4. Abstraction from cost, you think (I have X points, I need Y, let me get it) and not the cost of the items. It probably helps with the International business to charge constant "points" across regions and just price the points locally. Sure beats having to price everything EVERYWHERE. International pricing isn't simply the exchange rate + VAT once you have real marketing projects. But if they price the points right, they can single-price the stuff, keeping marketing costs down.
5. Accounting Rules. Depending on their accounting rules they may (or may not) be able to book this revenue. If the points never expire, they shouldn't be able to book it, as they collect the cash and have a liability (to provide you with a service), that becomes revenue when you use the points... that's typically why gift cards expire after 1-2 years depending on state (actually, eaten with monthly small transaction fees), so they can start eating up the balance that's sitting on the books as a liability to by taking the transaction fees out.
Since the points are probably non-refundable and the service virtual, they may have convinced their auditors that the revenue is incurred when the points are received, as there is no liability. OTOH: if they pay the content providers on a per-deal basis, this may not apply. But revenue recognition plays a role in these decisions as well.
6. Kids/Allowances, I assume that with passwords, etc., you can only allow the parent to log in and put "points on the account" that the kids can spend. Rather than having to fish out the credit card or give an 8-year old access to it, you can recharge their points weekly/monthly, and know that it's a fixed expenditure. That makes it MUCH easier for parents to control the spending without having to fight with their kids over it. It's easy to say "well that's parenting," but I like to focus my parenting time enjoying my time with my kids and focus my "parenting" on things that will impart values to them, fighting over video games is not at the top of my list.
Much easier to add 1000 points/week to the kid's account and let them stockpile points for things they want than have to have them run to you for each purchase. It's the same reason parents give kids the allowance, it let's them learn money management on their own through trial and error, instead of preaching parents.
Didn't Richard Pryor think of this? (And later the folks at Office Space)
Here is one place you can see Arco and others that take debit cards only and have a 45 cent transaction fee.
http://home.fueltracker.com/home.html
"Arco $3.05 $3.27 $0.00 Palomar at I-5 by North-bound ramp Debit cards only accepted with a 45 cent service charge. Cash is best"
and near the bottom of the list is this gem;
"El Cajon Blvd at 33rd Place (cash price)"
The post doesn't say if they take debit cards only or if that implies another price other than the cash price for credit card purchases.
The truth shall set you free!
I'm not buying it. They do the same thing on the Wii. They sell points in multiples of 1000 or 500. But then the games people really want to play get priced in multiples of 600 or 800. They can't convince me that a 5 year old game warrants 600 pts instead of 500 and that they'll be losing money if they didn't do that.
likewise, they could easily sell in multiples of 200 starting with 600.
Anyway you look at that statement, its not entirely honest. They're not saving anyone money, they're topping off their profit because they can at your inconvenience. Basically to paraphrase what he is saying: "Either you get an odd number of points you can't use without paying for more, or we take a small surcharge somewhere that most companies would be expected to eat for their customers as a cost of doing business. So either you pay, or we pay. Guess who wins? We do, and let me try to convince you that you should be glad!"
Microsoft does the same thing with the Zune Music Store. You don't get to buy an individual song (like you do with iTunes), instead you buy a block of points for $5 and use those points (in non-round numbers) to buy songs. MS is trying to minimize the bite of cc transaction fees buy forcing you into a minimum $5 purchase. The explanation for the non-round number of points needed to buy songs is that MS allows the RIAA to use variable pricing for their songs (unlike Apple which prices all songs at $0.99). It just "happens" to work out that you're always stuck with some leftover points that can't buy you anything.
There is one advantage for the consumer... the price you pay for the point cards at retail isn't always a fixed amount. I bought $20 worth of points directly from MS using a CC through the Marketplace back when I first got a 360 two years ago. Since then, I've bought the cards at sales. Averaged out, I've paid about $1 a point instead of $1.20.
-Redundancy Man strikes again!