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Why Xbox Live Doesn't Take Exact Change

Posted by ryuzaki0 on from the they-want-to-make-more-money dept.

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.

18 of 233 comments (clear)

  1. Translation by acvh · · Score: 4, Insightful

    "We make more money this way."

    1. Re:Translation by Joe+Jay+Bee · · Score: 5, Insightful

      Well, yes, but then there isn't really a viable infrastructure for micropayments. The closest we have is the credit/debit card systems, Visa/Mastercard/American Express et al, and they charge transaction fees on all payments, making it a rather expensive proposition. I can see why Microsoft would rather spend 50 cents on a 10 dollar debit card payment than 50 cents on a 10 cent debit card payment.

      --
      I write bullshit
    2. Re:Translation by plague3106 · · Score: 3, Informative

      Did your card have Visa or MC on it? If its Visa, I believe they are not allowed to put minimum purchase amounts before you can use the card. So if you want to spend $1 and you insist (they can REQUEST you use cash) and they still refuse, you can turn them in. Typically they will be fined.

      Also, I know someone that takes debit / credit cards; he prefer I use debit over credit because there are less fees to take debit vs. credit.

    3. Re:Translation by peragrin · · Score: 5, Insightful

      three words.

      iTunes Music store. Billions of dollars worth of music sold. Credit card companies charge fixed percentages. a $.99 charge costs $0.02 for the transaction.

      Also the xbox live credits aren't full dollar amounts either. So you can't get a one-one price ratio. MSFT did this to appear to be cheaper when they really aren't.

      This is only about MSFT greed and nothing more. MSFT can collect interest on your money sitting in their bank accounts while you try and figure out a way to spend it.

      --
      i thought once I was found, but it was only a dream.
    4. Re:Translation by MooseMuffin · · Score: 5, Insightful

      Well, I suppose this transaction fee explanation is actually a legitimate one, but now it brings me to another question. Shouldn't I get some kind of discount for buying points in large quantities? Me buying 2000 points at once saves them money over me buying 500 points four times doesn't it?

    5. Re:Translation by king-manic · · Score: 3, Informative

      Doesn't work that way, I'm afraid; if you want to accept Visa, Mastercard... any cards that exist, basically, they'll want a cut and will take fees. Then there's the infrastructure cost of setting up a whole damn bank... no, makes far more sense than selling points in blocks of 500. ;)

      Anyway, banks are bad enough without Microsoft running one... :P Actually Visa/MC take a percentage, and with the small family Chinese food place we owned there was no min charge. Thus $4.00 = $0.20 fee. $400.00 = $20.00 fee. The rounding might affect things since they tend to round up but the % taken is off of our total monthly and not individual transaction. So MS is talking out there ass unless they signed a really retarded deal with Visa/MC.

      E-commerce does vary and does have many per transaction set ups but I fail to believe MS would not have a more preferable contract.
      --
      "There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy."
    6. Re:Translation by VertigoAce · · Score: 4, Insightful

      Apple counts on customers buying multiple songs during the same day. They will group all of the tracks together over the course of a day or so and send one transaction to the credit card company. Sure, there's nothing stopping you from buying one track and waiting for the transaction to happen before buying another.

      I imagine with the Xbox marketplace people tend to make small purchases here and there, not a bunch of little purchases in the same day. So you prepay and the credit card transaction happens just once.

      Finally, all of the complaints seem to be very US-centric. With the point system, MS can post a piece of content globally and list the price as 400 MS Points. In the US, I know this is $5. Somebody in another country knows how much points cost in their country. So they don't need to know today's exchange rate, content stays a fixed price, and MS doesn't need to come up with dozens of local prices for each and every piece of content. Right now the only content that isn't a global point value is the video marketplace, since the licensing fees vary by country.

    7. Re:Translation by rgbscan · · Score: 3, Informative

      I work at a bank and we get this complaint all the time. Check out the bottom of page 14: http://www.usa.visa.com/download/merchants/rules_for_visa_merchants.pdf. This is clearly against visa's terms, and if you report it to both Visa (800-VISA-911) and your bank, chances are the merchant will get a stern talking to by a visa rep.

  2. What a load of crap! by nickj6282 · · Score: 4, Insightful

    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?

    1. Re:What a load of crap! by CatPieMan · · Score: 4, Informative

      If you've ever bought a couple songs for 2-3 days in a row, you've noticed that you only get 1 charge on the credit card. Apple will hold off charging you for a couple days to try to lump a couple purchases together to save on the CC transaction charges.

      --
      ---You're all I need, When the water runs deep, You're all I need, Now I cry my soul to sleep -- Collective Soul, Needs
  3. Carnie System by SunnyDaze · · Score: 4, Insightful

    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.

  4. Live and credit cards by king-manic · · Score: 4, Interesting

    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."
  5. The answer lies in the interest... by BobMcD · · Score: 3, Insightful

    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.

  6. It's called breakage by Evro · · Score: 4, Informative

    ... 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)

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    rooooar
  7. No, there really is something to this by Sycraft-fu · · Score: 3, Insightful

    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.

  8. Re:It Should Be An Option... by plague3106 · · Score: 3, Interesting

    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.

    Visa (and I imagine MC) prohit a store from displaying the VISA logo and then refusing based on minium (or maximum) purchase prices. If the store refuses, you can contact your bank, who will contact Visa. Visa typically fines the stores that violate the policy.

    I did this once, and shortly after the signs saying "$10 min. card purchases" was removed.

  9. Re:That's just unfair. by joggle · · Score: 4, Insightful

    I think it would be more fair if you could buy points in multiples of what you anticipate buying. So there could be an option to purchase 1200 points, 2400 points, etc. MS claims to be concerned about many small CC transactions. So just give more options when buying points above 10 dollars or whatever (as opposed to having to buy in multiples of 500 no matter what). This would seem to be trivially easy to implement. I think Microsoft intentionally does this so that virtually everyone carries a balance, allowing Microsoft to earn interest or in some other way capitalize on what is effectively a large savings account to them.

  10. The hot dog problem. by Kaenneth · · Score: 5, Funny

    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