The Psychology of Steam Wallet & Microsoft Points

Hugh Pickens writes "Ever bought something from Xbox Live Arcade? The first time, you may have been a bit bamboozled by the process because Microsoft doesn't just let you put $15 on your credit card to buy a new game; purchases are done in 'Microsoft Points' that you deposit into a virtual wallet and you use the points to buy stuff. 'Gamers possessed of equal parts suspicion and curiosity may wonder why our gaming overlords adopted such a strange system instead of just letting us pay real money for our purchases,' writes game psychologist James Madigan. He says the real reason for Microsoft Points is that sometimes you are going to have some points left over in your account. Leaving money on the table or in your Xbox Live account makes most of us a bit uncomfortable (PDF) because it feels wasteful. 'It's similar to overeating at a buffet or doubling your paper towel use after buying the 124 roll jumbo pack,' says Madigan. 'Even though you could just let those paper towels or Nintendo Points sit there until you have a good reason to use them, spending real money on something else seems wasteful.' And Microsoft isn't the only one – Sony and Nintendo have similar systems, and Valve has even rolled out a 'Steam Wallet' for in-game microtransactions."

Comments

Not to mention

[Hermanas]

The extra money lying around in their bank accounts, while not spent by the customer, could earn them millions in interest.

Re:Not to mention

[sgbett]

This is the number one reason for doing it imho. The psychology part is a nice, but the 20million users who all paid, say, an extra $5 more than they would if they could buy things for the dollar price, is far more interesting to shareholders.

Re:Not to mention

[piripiri]

And some people won't spend the few bucks left on their account when they stop playing for whatever reason, which goes directly to Microsoft's pockets. This also apply to gift cards from shops, some people won't use them or use them too late when the amount has expired.

Re:Not to mention

[twistedsymphony]

I typically buy a $50 (4000MP) card at my local brick & mortar store and the throw the points on my console... I don't see how that would really help MS gain interest on my purchase.

I do this for 2 reasons:

1. 1. Using a points card means I don't have to have a CC associated with my online account
2. 2. I can more easily keep track of my spending, if I'm limit myself to buying say 1 card every 6 months then when I'm low on points I'm less likely to make impulse purchases since I can't just add more points from my CC with the push of a button.

Honestly I really don't give a sh*t if someone is making interest on my $50... it's worth what? a few pennies TOPS. Good for them if they're smart enough to leverage that advantage, at least they're putting that money to better use than anything I'm doing with it (buying virtual garbage).

Re:Not to mention

[Anonymous Coward]

I think it can be an important phenomenon, as a pretty regular XBLA buyer myself I always keep $20 - 40 into the account...

Re:Not to mention

[Obyron]

I'm not sure it works that way. I don't think XBL points are like the gold standard. I mean, you pay $20USD for however many points-- say 500 (Totally made up numbers here, but $0.04 USD per point). The transaction is done at that point, and Microsoft banks the cash, even if you don't spend your points for six months. It's not like you buy your premium horse armor for 415 points, but Microsoft still has to keep $3.40 in escrow to cover the "value" of your unspent points.

In my opinion the number one reason to do this is to decouple the idea of physical value from points. You don't have $3.40 in your XBL wallet, you have 85 points, and when you spend those 85 points to buy some pretty pixels on your screen you're not thinking about the fact that it was once $3.40. The second reason is exactly so they DON'T have to do what you're saying-- have fractional portions of a customer's unspent money laying around. If you still have $3.40 in your account at some point and you stop playing XBL, you're going to try to finagle a refund. When you have 85 Points it's easier for you to let go, because you're already been separated from the idea of it having physical value. The third big reason is that it allows a microtransaction model without paying tons of credit car processing fees. They'd rather sell you 1000 points up front even if you only spend them 100 at a time, rather than pay 10 times the processing fees using credit cards up front for every purchase.

Re:Not to mention

[Dunbal]

could earn them millions in interest.

Yeah - hey wait, have you seen what banks are paying in interest lately? I think even Berkshire Hathaway would be hard pressed to earn "millions in interest" from a bank account. Especially when you deduct all those fees banks like to charge for the difficult task of having to hold your money. You could possibly earn millions from bonds if you had enough capital, but now you have introduced an element of risk...

Re:Not to mention

[Luckyo]

Honestly I really don't give a sh*t if someone is making interest on my $50... it's worth what? a few pennies TOPS. Good for them if they're smart enough to leverage that advantage, at least they're putting that money to better use than anything I'm doing with it (buying virtual garbage).

And that is the attitude that lets biggest swindlers of all times in financial world net billions. And who could blame them - the true responsibility SHOULD lie with people who pack this attitude.

Re:Not to mention

[sglewis100]

I typically buy a $50 (4000MP) card at my local brick & mortar store and the throw the points on my console... I don't see how that would really help MS gain interest on my purchase.

Did Microsoft give your local store the card for free, and say "If you sell it, just keep the $50?" That's how they get interest even from you. If something costs $10, and you pay $10 on the spot for it via credit card, then they get the money as you need to spend it. By selling pre-paid cards to stores and pre-selling others points they collect the money earlier in the process, which yes, could earn interest.

They would accordingly earn less interest if they just sold you stuff on "credit", and mailed you a paper bill after the fact and waited for you to mail a check. It has nothing to do with it being a virtual purchase, or whether or not what you buy has any physical properties or cost to create, the sooner they get money from you, the sooner that income can be banked.

Re:Not to mention

[Anonymous Coward]

I typically buy a $50 (4000MP) card at my local brick & mortar store and the throw the points on my console... I don't see how that would really help MS gain interest on my purchase.

Microsoft gets its money for the game card when you buy it from the store (and the person at the register scans or punches in some codes to activate the card, just like with gift cards). So they make the same amount of interest on you that they would on anyone else, all else being equal. (Well, interest-time, at least. The store probably gets a cut of the overall price.)

Possibly they make MORE interest on the cards, actually. Those are often bought as gifts, meaning they sit idle and un-activated for a while before they're ever given to the actual gamer.

Re:Not to mention

[metacell]

Well, even if you don't actually put it in the bank, you can earn money from having capital at your disposal.

For example, a firm that's taking deposits from their customers can use them to...

* Pay back some of their bank loans, so they need to pay less interest to the bank
* Stock their inventory so they can sell more
* Invest in a machine which makes their work more efficient ... and so on.

It's not negligible. The gain may only be a small percentage of the total deposits, but since it's easy to keep deposits and doesn't require much work on the part of the firm, it's almost like free money.

When the deposits are paid towards virtual items, there's not even the risk that the firm will need the capital when the customers demand goods for their deposits, since virtual items can be created for free.

Re:Not to mention

[VGPowerlord]

I'm not sure it works that way. I don't think XBL points are like the gold standard. I mean, you pay $20USD for 1600 points ($0.80 USD per point). The transaction is done at that point, and Microsoft banks the cash, even if you don't spend your points for six months. It's not like you buy your premium horse armor for 200 points, but Microsoft still has to keep $17.50 in escrow to cover the "value" of your unspent points.

In my opinion the number one reason to do this is to decouple the idea of physical value from points. You don't have $17.50 in your XBL wallet, you have 1400 points, and when you spend those 1400 points to buy some pretty pixels on your screen you're not thinking about the fact that it was once $17.50. The second reason is exactly so they DON'T have to do what you're saying-- have fractional portions of a customer's unspent money laying around. If you still have $17.50 in your account at some point and you stop playing XBL, you're going to try to finagle a refund. When you have 1400 Points it's easier for you to let go, because you're already been separated from the idea of it having physical value. The third big reason is that it allows a microtransaction model without paying tons of credit car processing fees. They'd rather sell you 1000 points up front even if you only spend them 100 at a time, rather than pay 10 times the processing fees using credit cards up front for every purchase.

FTFY

However, the problem is also that the point values that games and things aren't always round amounts. Some amounts are easy to figure out how they map to real world money, such as:
80 - $1.00
200 - $2.50
400 - $5
800 - $10
1200 - $15
1600 - $20
2000 - $25

But then, every so often, you have something thrown in at some in-between price.

However, there's one other significant niggle here:

The more expensive items on Xbox Live (the "Games on Demand" store section) are listed in dollars, and you cannot spend MS Points on them*.

In case you're wondering, Games on Demand is not a digital rental service, but the part of XBLA that sells big-budget retail games (that also have disc versions).

* Unless this changed since I checked it last year. I'm not going to buy Games on Demand when the disc versions are the same price or cheaper for a system that I can sell my used games if I no longer want them.

Re:Not to mention

[Anonymous Coward]

You're all missing the point - 124 does NOT tesselate-out conveniently ANY way (except 4 x 31 and THAT would make an inconvenient package) to make a reasonably-sized/shaped parcel for buying in the store! Even in 3D, it doesn't work!

Focus, people - FOCUS!

Re:Not to mention

[Golddess]

The transaction is done at that point

From your perspective and Microsoft's, yes. Not from the perspective of non-MS developer's/publisher's though.

It's not like you buy your premium horse armor for 415 points, but Microsoft still has to keep $3.40 in escrow to cover the "value" of your unspent points.

But if 6 months down the line you then buy some 85 point item from a non-MS developer/publisher, MS does have to give that remaining $3.40 (or some fraction thereof) to that developer/publisher. So in a sense, they do need to keep it "in escrow", since they need to be able to pay the non-MS developer/publisher you bought your item from.

Re:Not to mention

[SilentStaid]

I think you mean that it's 80 points per USD.

Re:Not to mention

[Anonymous Coward]

I dont think you read what he wrote.

80 - $1.00
200 - $2.50
400 - $5
800 - $10
1200 - $15
1600 - $20
2000 - $25

That should clear it up a little.

Re:Not to mention

[SilentStaid]

I don't think you read it, sir. In the first part he clearly says: "you pay $20USD for 1600 points ($0.80 USD per point)." after saying FTFY.

Re:Not to mention

[kokojie]

I have never understood the need to exchange real money for equal amount of "fake money" that you can only spend at a certain shop. Most gift cards don't even give discounts.

Re:Not to mention

[VGPowerlord]

I think you mean that it's 80 points per USD.

Yeah, I screwed up my math on the USDs per point (which is not the same as points per USD). It's $0.0125 USD per point. The chart in the lower part of the post is correct, though.

Re:Not to mention

[hedwards]

Indeed, and they refuse to let you have your money back. I ended up reporting their fraudulent points program to the Attorney General's office because not only do they require you to buy points, but they won't sell them to you in just the increments necessary to make a purchase and carry differing sizes of bundles between their store sites. That has presumably changed, but the whole system was set up in such a way that the consumer is unable to buy just one thing in many cases without overpaying.

Re:Not to mention

[tlhIngan]

I buy points cards and prepaid cards for one simple reason - they go on SALE.

When I can get a "free" 25% discount by buying a $20 points card for $15, it's a net win to me. Ditto Xbox Live Gold membership - regular price $60, discounted price $50 without looking too hard. Hell, Microsoft even runs Live Gold specials from time to time. But Dell, Amazon, etc., they often have tons of sales on the stuff.

Also, I don't see leftovers being a huge win for Microsoft in the end - firstly, getting stuck with over 100 points will be hard since there's enough crap to easily put you under it, and if you have 400 points or so, that's enough for many XBLA games, especially those on sale. And since they don't expire, big whoop.

And for the more expensive things like movie rentals and 360 games (yes, you can buy Xbox360 games through Xbox Live - though they typically take a few months after release), you can choose to pay either by points or the real dollar amount. For me, it's points since those are on sale often enough.

Re:Not to mention

[Cinder6]

I would be curious to see a study on which type of payment system nets more profit - points or real money. Anecdotal and all, but for myself, I cannot stand the MS points (or Nintendo points) systems. It's related to the psychology aspect, but in reverse--I hate knowing that I'll have points left over, and I don't want to spend any more money. So I already feel robbed for having to pay extra in the first place, and then that extra just sits there. There's also an aspect where I feel like MS is being dishonest with their pricing, which makes me less likely to buy from the service.

There are actually a number of XBLA games I would like to buy, and if I did a tiny bit of math I could figure out which combinations would let me spend exactly the amount of money I need to buy them. That's too much hassle, however, so I just buy everything off of Steam and PSN. Total purchases on XBLA: 6 (Limbo and a couple GH3 packs). Total PSN purchases: 50+.

Well, I would buy more off of PSN. You know, if I could...and if I still trusted it.

Re:Not to mention

[Dunbal]

I understand that - but I think Hermanas was forgetting the significance of a 0-.25% interest rate. When I was younger, you could easily get a 13% interest rate on a savings account. Inflation was around 10% or so. That meant that you were about 3% ahead of inflation. Today, inflation is (supposedly) around 3% (but probably more), you are lucky to get 1% interest on a savings account, so you actually LOSE money by keeping cash lying around. Without considering bank fees at all.

Of course this is by design. The government wants to encourage spending, so low to no interest rates are here to stay. They are much happier with people risking their money by making the decisions you mentioned in your post (buying machinery, inventory, etc) because they believe this "stimulates the economy". Of course what it really does is destroy the incentive to save and forces people to take unnecessary risk.

In the case of a "virtual currency" I agree that the company that issues said currency can immediately turn around and use the cash for something else. They would be wise, however, to keep a cash reserve to cover themselves in the case of a sudden increase of "withdrawals" or purchases drawn on the currency. If the currency is ONLY exchangeable for something like software - especially electronically distributed software, then they can immediately spend all the cash - because as we all know, the marginal cost of distributing that additional copy of software is next to nothing. If at any point however the virtual currency can be converted back to real currency, then they have to operate like a bank and keep 20% or so in reserve at all times.

Re:Not to mention

[JMJimmy]

I don't know about most people but a simple "close enough" method I use is to divide the price in MSP by 61 - that gives me the real cost of the item taxes (13% here) and exchange rates (if applicable) included. You'll have to figure this out on your own but for me I'll buy 6000 point blocks which cost between $97 and $98 dollars. 6000/98 = 61.2244...

While not 100% accurate to divide by 61 it's close enough to let me know how much I'm actually spending. I can't say that I've ever felt the need to use up so called "left over points". I know at some point I'll buy another 6000 point block and my purchases will probably have odd point values then as well so it'll all even out in the end.

80 = $1.31
160 = $2.32
200 = $3.28
240 = $3.93
400 = $6.56
600 = $9.84
800 = $13.11 (highest I'll pay for an arcade game)

I honestly believe the reason for MSP and the like is far more mundane - it allows companies to set a unified global price for an item and adjust the regional price for a game by the cost of the points in a given region. That's also why buying a US MSP code won't work in the UK and vice versa.

Re:Not to mention

[Anonymous Coward]

Completely agree, but what's wrong with that?

Re:Not to mention

[smelch]

Its profit and people are even worried about Microsoft taking fractional cents from them. Where have you been the last 4 years?

Re:Not to mention

[thegarbz]

This is the number oldest trick in the book. Companies have been doing this for years. Even the government which ran our electronic tolling system here had a "minimum" value that an account could be at before they started sending you nasty letters (in the case of manual top-up, and even cited their policy that accounts will have at least $10 in them) or automatically charging your credit card to re-fill.

These days on the website I can select my minimum top-up from the CC at $30, and the minimum account value before automatic top-up $15. How does that make sense when the highest possible toll one can pay is $11, and for my little car currently we pay $4?

Re:Not to mention

[Plombo]

It takes advantage of our cultural perception of gifts - the perception is that if you buy someone a gift card instead of giving them cash, you must have put more thought into it. Which is complete bullcrap, but that doesn't change things.

Re:Not to mention

[sorak]

This is the number one reason for doing it imho. The psychology part is a nice, but the 20million users who all paid, say, an extra $5 more than they would if they could buy things for the dollar price, is far more interesting to shareholders.

There is also the saving they can make on microtransactions. Most CC transactions (for smaller businesses) incur a cost similar to 35 cents plus 10% of the purchase (this isn't an exact quote, btw). If you are planning to sell $5 games, it makes more sense to have the customer make a few large transactions with the CC companies and several small "impulse buys" made with their own transaction-cost-free funny money.

Re:Not to mention

[sgbett]

Hmm, I like your thinking. Good spot.

Re:Not to mention

[eharvill]

Depending on the type of card, etc, the money (or at least all of it) typically does not go back to the issuing vendor any longer. Not sure if it applies to these online points purchases or not. http://www.bankrate.com/brm/news/cc/20060127a1.asp

Re:Not to mention

[QuietMarin]

I don't think they'd be keeping it in the bank. Something like a mutual fund will get you around 10% interest or more, depending on the fund.

Err, hello America, rest of the world here

[Anonymous Coward]

The psychology is great, but a more simple explanation is that you have to pick a currency to price things in. Why not a virtual one rather than a real one? I can't imagine Americans tolerating Euro prices or vice versa. This way, everything's priced in points and we're happy.

Re:Err, hello America, rest of the world here

[Xest]

Yes, we've been through this whole Microsoft points thing here previously about 10 times, and as I pointed out then the cost of Microsoft points means purchases made in currencies such as the British pound are, depending on exchange rates, sometimes even better than the US pricing, but generally fairly close.

This is far better than online stores that use real money and charge the same numeric value in pounds as they do dollars which can be a 60% or more hike in price for those of us in the UK.

Whatever you think of Microsoft, and whatever conspiracy theory people have for Microsoft points, what can't be denied is that Microsoft points have generally offered much closer parity in global pricing than real currency purchase options have for online transactions from the likes of Steam, and iTunes et al. When Steam removed the option to buy games in US dollars for people here in the UK for example, it amounted to a massive price hike, to the point of in some cases even doubling the price of things.

Personally I'll vote with my wallet, and sure if Microsoft points become a rip off I wont bother with them, but until then they're still a far better deal than most other offerings out there.

Re:Err, hello America, rest of the world here

[Vectormatic]

currency variations can be dealt with in-shop. Apple charges $1 for US based app-buys, while us europeans pay €0,79 for the same app

same goes for the android store

Re:Err, hello America, rest of the world here

[meist3r]

I can't imagine Americans tolerating Euro prices or vice versa. This way, everything's priced in points and we're happy.

I'd very much tolerate USD prices since it's usually cheaper. I buy all my physical video games from the UK because the conversion rate saves me about 20-30% for new games (Portal 2 Xbox360 - German Amazon 55€ - UK Amazon 42€) even after the German VAT is added. Also I don't have to deal with the terrible dubbed versions. If the points were any cheaper to set off the differences I'd be ok but that's not the case. 2000 MSP cost about 25USD (17€) as far as I know. In Germany 2000MSP cost 24€ (34USD). Basically I pay 30% more for the same games on XBL and it's the same files transferred through the same pipes. If you really want to have an international "virtual" currency you'd have to adjust it across borders to make it fair. Granted there are some taxes incurred but those are not even close to justifying this discrepancy.

Re:Err, hello America, rest of the world here

[Aladrin]

Most services already show prices in local currency anyhow. This is above and beyond that.

Re:Err, hello America, rest of the world here

[91degrees]

Why does everyone assume there's a single specific reason?

The psychology is a factor. The currency thing is a factor. Having extra cash sitting around is a factor.

Re:Err, hello America, rest of the world here

[delinear]

Not only that, MS also price their "Games on Demand" in real currency, not MS points (at least they do here in the UK, I assume it's the same everywhere), so they're already having to deal with currency variations and accepting payments in different currencies, so MS points does nothing to solve that. No, I think the OP has it right, this is about making people more comfortable with leaving their money in the accounts of these companies.

Re:Err, hello America, rest of the world here

[Xest]

I know they can be, but quite often they're not, and rarely are they ever to a fair extent and that's the fundamental point. At current exchange rates you're still paying â0.10 euros more per app than Americans, when the dollar was even weaker and the euro stronger that was exagerated even more greatly. My point is that historically Microsoft has been very very good at minimising exchange rate differences using Microsoft points- more so than stores that just change currencies to suit, which, for some god unknown reason seem to take the opportunity to charge the tax difference and then a whole bunch more on top to boot. Microsoft for all their other faults, have generally done a very good job of avoiding this problem with MS points, and have been pretty good in ensuring people get as fair a deal across the globe as possible.

The issue isn't of currency variations in themselves, it's about how far companies go in abusing currency variations for charging higher regional pricing. Or in other words, thus far, Microsoft have been very good at using Microsoft points to provide a much fairer reflection of real differences in exchange rates, something companies who charge real currency values to date simply have not- Apple with iTunes included where Apple was even ruled against over the issue with the gross disparity between GBP and Euro pricing at one point.

Re:Err, hello America, rest of the world here

[Moryath]

Another factor: Credit card transaction fees can be ridiculously high.

Ever gone to a Chinese restaurant and seen "minimum credit card purchase: $20" on a sign? Guess why - they're being charged $4 or more per transaction, if you buy a $10 lunch, they just lost money after the credit card company takes their bite.

So you can understand why Microsoft, Steam, et al would want to do it similarly. They may have negotiated a lower transaction fee through large-house power, but the Visa/Monstercard monopoly is a monopoly even worse than MS, and even if they got the fee down to $1 per transaction, $1 times millions of transactions still = Millions of Dollars.

Re:Err, hello America, rest of the world here

[RoFLKOPTr]

Guess why - they're being charged $4 or more per transaction

No they're not. They're probably being charged something along the lines of $0.30 + 3% of the transaction amount. So for a $10 lunch that would be more along the lines of $0.60. Still a pretty large chunk of change but it's nowhere near several dollars for a transaction that small.

Re:Err, hello America, rest of the world here

[Ironhandx]

Stop talking out of your ass.

Large retail chains, or even some larger independant stores, will get those sorts of fees. I've personally negotiated a 2% flat fee with our processor because we do millions in CC transactions every year.

Now, thats here, in North America. Its fairly normal across the continent, excepting a few places.

Those places often get nailed with flat fees of $1.50+ per transaction, plus 3-5%. I can easily imagine it being much higher in China as the worst place I've personally seen here they get nailed for $3 per transaction plus 3%, which is what the GP said.

Your post makes the thread title even more appropriate.

Re:Err, hello America, rest of the world here

[DrXym]

If Microsoft have been fairer with exchange rates (and I'll take your word for it), that is in spite of using points. Points are just another layer of opacity that is intended to confuse users and break the association between a purchase and how much it would cost in real world money.

It's easier to figure out if you're being ripped off if the price a service charges is in real world money. You can draw comparison to the price on Amazon, or even compare prices to another region. It's not easy at all to do when everything is in points. I expect the exchange rate can also be altered at any time without prior warning so your points are suddenly worth less in real terms. I also suspect that by buying points or some other scrip be it disney dollars, smurf berries, dubloons or any other kind of "fun" token that you are putting yourself in a worse situation from a legal standpoint if you did need to take things to the court for a refund.

Re:Err, hello America, rest of the world here

[Rogerborg]

Why does everyone assume there's a single specific reason?

Well, people have a tendency to make bold, sweeping, over simplified statements.

Everybody in the world except you has noticed that.

Re:Err, hello America, rest of the world here

[binkzz]

I can't imagine Americans tolerating Euro prices or vice versa. This way, everything's priced in points and we're happy.

I'd very much tolerate USD prices since it's usually cheaper. I buy all my physical video games from the UK because the conversion rate saves me about 20-30% for new games (Portal 2 Xbox360 - German Amazon 55â - UK Amazon 42â) even after the German VAT is added. Also I don't have to deal with the terrible dubbed versions. If the points were any cheaper to set off the differences I'd be ok but that's not the case. 2000 MSP cost about 25USD (17â) as far as I know. In Germany 2000MSP cost 24â (34USD). Basically I pay 30% more for the same games on XBL and it's the same files transferred through the same pipes. If you really want to have an international "virtual" currency you'd have to adjust it across borders to make it fair. Granted there are some taxes incurred but those are not even close to justifying this discrepancy.

I very much agree. The biggest thread on the Steam forums is exactly about this issue, but Valve has said they'll keep pricing unevenly as long as some people keep buying.

Re:Err, hello America, rest of the world here

[Xest]

As I say I don't disagree that those things can happen, just that in 5 years they haven't, which is a pretty decent track record.

I don't find it too hard understanding how much I'm paying for things with Microsoft points, you know how much you bought them for in your local currency, and with fixed price points on most things you buy like XBLA games of 400, 800 and 1200 points it's not hard to divide up your points and get a rough idea of how much you're paying although I fully accept some people aren't savvy enough to do that.

Re:Err, hello America, rest of the world here

[Anonymous Coward]

Anyone paying $1.50 per transaction is getting screwed. We pay $0.25 + 2-3% for card not present transactions, and brick and mortar is usually lower than this. This is for under $1m in transactions a year, and pretty much advertised rates.

Also, OP asking if you've ever been to a "Chinese restaurant with $20 minimum" most likely refers to a Chinese restaurant in the US, not China (seeing as the sign is in English and the currency in dollars).

Re:Err, hello America, rest of the world here

[Anonymous Coward]

and that's when the psychology kicks in.

notice that purchasable points and item costs are relatively prime.

so you get those 2100 points for the 1200 points purchase, and the left over you spend more easily just because the points are there already, are few and of low total worth, and that facilitates compulsory purchase.

Re:Err, hello America, rest of the world here

[Anonymous Coward]

IF they let me buy any amount of points that i want i would have no problem with the ms points system. the fact is they purposly make you buy packs of points in vales that make it virtualy impossible to spend all of them on an item. often you need to buy 5 or 6 items to get your account down to 0. This points system is nothing but a scam to make the consumer pay more money then they would otherwise spend in their shop so that they dont waste their money.
And yes extra points sitting in your accout is wasted money if you are not a hibitual user of their shop...

Re:Err, hello America, rest of the world here

[mehrotra.akash]

Atleast in India, most CC transactions are charged at 2%, and thats for small shops which make maybe 10-15 transactions a month

Re:Err, hello America, rest of the world here

[sglewis100]

Another factor: Credit card transaction fees can be ridiculously high.

Ever gone to a Chinese restaurant and seen "minimum credit card purchase: $20" on a sign? Guess why - they're being charged $4 or more per transaction, if you buy a $10 lunch, they just lost money after the credit card company takes their bite.

So you can understand why Microsoft, Steam, et al would want to do it similarly. They may have negotiated a lower transaction fee through large-house power, but the Visa/Monstercard monopoly is a monopoly even worse than MS, and even if they got the fee down to $1 per transaction, $1 times millions of transactions still = Millions of Dollars.

$10 is a more common minimum where I go, but no, they are not charged $4 or more per transaction. There's a small (usually 25 cents or less in America) transaction fee, plus a percentage of the total bill. Specifically, restaurants get a lower percentage, by nature of the lower number of chargebacks, and the fact that every card is typically swiped, not keyed in. That's why in urban areas, restaurant deliverymen typically bring a carbon receipt and swipe your card, it's because of the agreement between restaurant owners and the merchant banks to swipe cards.

The reverse is true too. Online adult sites (which have limited choices for merchant banks in the first place) pay MUCH higher percentage rates, because they neither swipe cards, nor celebrate a very low chargeback rate.

Re:Err, hello America, rest of the world here

[Xest]

I've noticed that with the 2100 cards only, but if you buy points directly via Live then you pick denominations that are much more easily divisible, the highest option being 6000 into which values like 1200, 800 and 400 fit quite well.

Re:Err, hello America, rest of the world here

[DanTheStone]

the fact is they purposly make you buy packs of points in vales that make it virtualy impossible to spend all of them on an item.

They sell a 400-point bundle for $5 and an 800-point bundle for $10. Most arcade games are 400 or 800 or 1200 points. That's hardly "virtually impossible" to spend on one item.

Re:Err, hello America, rest of the world here

[Anonymous Coward]

He is talking about Chinese restaurants, not restaurants in China.

The people who run Chinese restaurants do not like credit cards, and in particular, they do not like paying the fees.

Re:Err, hello America, rest of the world here

[jedidiah]

3% or 5% is many businesses is still enough to make accepting credit cards more trouble than they are worth.

You simply don't have to make up bogus large numbers in order to scare people. The real numbers are suitably bad.

Some establishments will even go so far and violate the merchant agreement and charge you the processing fee so they don't have to absorb it.

Re:Err, hello America, rest of the world here

[Jessified]

Exactly: I don't see this as having to be a big complicated conspiracy theory. I'm sure they are trying to cash in on a psychological phenomenon as well as solve the problem of which universal currency to use. However, a little self control on the part of the consumer completely negates the problem. Be okay with having a little bit of money left over in your account for another future purchase. Yes they probably use it as capital, but it's not like you were going to make that much money off of 2-3 dollars, so take a deep breath.

Re:Err, hello America, rest of the world here

[hedwards]

No, he's correct, and any store that posts such minimums for service is in violation of their agreement with the Visa or Mastercard. The GGP wasn't referring to a Chineses restaurant in China, those places are unlikely to take credit at all, but in the US presumably. And they don't get charged that much in terms of processing fees.

Re:Err, hello America, rest of the world here

[Anonymous Coward]

sure, but if you get the 6000 points card, then they've already won :D

Re:Err, hello America, rest of the world here

[Ironhandx]

I'm not making up numbers. I've actually seen the paper backing up those numbers personally. I didn't believe the flat fee myself at first but its all there.

These aren't out of China. They are largely out of Canada. Which is why I mentioned I wouldn't be surprised about the processing fees. It all depends of course, their fees could be better than what we get in some places in Canada, I have no idea. I just wouldn't be surprised about it being $4.

Re:Err, hello America, rest of the world here

[Anonymous Coward]

I didn't say it was fair; I said it was simple, in that there's one (point) price for everyone. It saves MS effort in pricing everything for every market.

On another topic (since I didn't at any point suggest that the pricing was supposed to be more *equitable*, merely simpler): regarding your pricing difference between German and US points, it is there, but not as great as you make out. In the US your points are sales tax free if bought online and in Germany you have a tax rate somewhere close to 20%. The remaining 10% is probably not clear margin, since currency fluctuations will make it vary and MS's internal exchange rate will not be the spot rate on the day but whatever their finance dept sets. So they might be getting more out of you, but in this one specific case they probably aren't ripping you off as badly as you think. (Unlike your cited games pricing, and unlike every Apple product ever.)

I hate any system where you can buy "points"

[Chrisq]

I hate any system where you can buy "points" but have no way of changing points back to money. Thye know that they are on to a good thing - either you spend it, which often means adding more, or you leave it as a zero-interest loan to them (which also falls outside any financial regulations or compensation schemes should they go bust).

Re:I hate any system where you can buy "points"

[x*yy*x]

Do you mean pushing back the money? Bank accounts, sure. Credit cards, I guess most work. Point cards, no.

But because of anti-laundering laws, you cannot allow customers just decide where they want to send it. It will create huge problem with money launderers, credit card theft and other related things. People already do it in poker tables and they try to have sophisticated systems to prevent it. Someone loads money to an account (with stolen credit card or other illegal funds) and loses it in table other player who then withdraws it. Only reason they have to lose it first if because they also cannot just directly transfer it elsewhere or it will trigger fraud alerts.

And since there really is no harm done for MS, Sony or Nintendo to just leave the few dollars sitting in the accounts, I'm not sure they want to get into all of that.

Re:I hate any system where you can buy "points"

[sosume]

I absolutely refuse to buy any virtual currency. If that's the way they want to do business, then there will be no business at all.
This raises the question, which is more: the extra points spent on rubbish purchases, or the loss in potential revenue from
customers who do not participate in such transactions?

In the end, I will buy my games in the local shop, and then transfer them to Steam.

But most on /. already know that marketing is one of the greatest evils ever.

Re:I hate any system where you can buy "points"

[x*yy*x]

In the end, I will buy my games in the local shop, and then transfer them to Steam.

I doubt your local shop sells you virtual TF2 hats. Since that's all you use virtual currency in steam for, the actual games you buy with real money just like before. Besides, you can't transfer most retail games to Steam unless they're Valve's own games (+ a small list of exceptions that allow it)

Re:I hate any system where you can buy "points"

[Lumpy]

Major BS.

I can go to a casino and cash out from a CC $5000 and have it put on a 1 arm bandit. then play for a little while and hit the cash out button. it gives me a PAPER receipt with a magstripe that I can hand off to the mule to then cash out.
Yes it's moving chump change amounts like $5000 and $10000 but it's doable at a casino without much effort. I'm certian that at bigger casinos if you let them in on the cut you can move a lot more.

Casinos are perfect for this because of the sheer amount of money moving through them is impossible for the feds to keep track of.

Re:I hate any system where you can buy "points"

[Lumpy]

Short of silly useless crap like DLC and a new cyber hat for your cyber avatar you do not need to spend money on their fake money. all the good games in the "arcade" section are available 6 months later on a Disc at EB games.

Re:I hate any system where you can buy "points"

[x*yy*x]

I was talking about online casinos, because Live and Steam are online services aswell.

Re:I hate any system where you can buy "points"

[weicco]

I hate any system where you can buy "points" but have no way of changing points back to money.

It would be a great way to avoid inflation. And you could use it for currency trade, buy in euros, sell in dollars (or something like that).

Re:I hate any system where you can buy "points"

[daid303]

Besides, you can't transfer most retail games to Steam unless they're Valve's own games (+ a small list of exceptions that allow it)

That's up to the creators of the game I think. Spacechem (indie game) can be activated on steam if you bought it otherwise.

Re:I hate any system where you can buy "points"

[Dunbal]

if you let them in on the cut you can move a lot more.

Of course if you have enough cash to move, you might as well own the casino... oh wait-

Re:I hate any system where you can buy "points"

[Anonymous Coward]

I'm sure MS and all are deeply sad that you and the other guy with such high moral avoid their virtual stores (thank god you found a clever loophole allowing you to pay them anyway in the end).
In the meantime they can compensate by counting the bazillion dollars they made selling virtual garments for a ridiculously high price (and keeping the change for you while they're at it)...

The other geeks will continue enjoying nice & fun games (remember this forgotten genre ?) delivered instantly on the day of release for the measly price of selling one's soul to the marketing devils.

Re:I hate any system where you can buy "points"

[Anonymous Coward]

It doesn't avoid inflation. XBLA game prices have been gradually increasing right along with the price of everything else. $15 has become the new standard price for most games, up from the $10 years ago.

Re:I hate any system where you can buy "points"

[i kan reed]

To be fair, inflation seems to occur on the money->points side not the points->games side, meaning it's inflation immune.

Re:I hate any system where you can buy "points"

[VortexCortex]

I hate any system where you can buy "points" but have no way of changing points back to money. Thye know that they are on to a good thing - either you spend it, which often means adding more, or you leave it as a zero-interest loan to them (which also falls outside any financial regulations or compensation schemes should they go bust).

Point taken -- However, MS does (or at least they did when I did it) let you link your credit card to your XBL account. Thus, you can complain to your credit card company about undelivered product, and have the charges removed -- I wonder if digital goods are covered under the purchase insurance?

I'd like to offer another POV: It's nice to allow kids without bank accounts or credit cards to spend their allowance on MS points & XBL subscriptions so they are not excluded from the online world (which is increasingly a more important part of games).

It's also nice that when your servers are infiltrated, everyone who has been only using the MS points is protected from having their credit card numbers exposed.

(Note: the same applies to Sony's equivalent of MS points -- sorry, I can't force myself to care enough to even Google info about mfg's I boycott)

Re:I hate any system where you can buy "points"

[Anonymous Coward]

A lot of rereleases and indie games will never be pressed to disc. There's a good selection of revived games from the Dreamcast on XBLA that you won't be able to get anywhere else. They're also updated a bit with things like online play and the like. There's also the XNA indie games which will probably never be released in a brick and mortar either.

Re:I hate any system where you can buy "points"

[Anonymous Coward]

silly useless crap like DLC

How is DLC "useless"?

Re:I hate any system where you can buy "points"

[Solandri]

I hate any system where you can buy "points" but have no way of changing points back to money.

While I agree that points systems are mostly a psychological scam to get people to spend more money, there actually is one good reason for not letting you change points back to money. Many places have laws restricting or prohibiting online gambling. If a system worked on dollars or euros or whatever, and let you play a minigame where you could win or lose money, suddenly it's gambling and subject to a whole bunch of new laws. But if the system converts your money to nonrefundable points and you play to win or lose points, even though it's still gambling you're now gambling in points instead of "real money", so it's considered ok.

Re:I hate any system where you can buy "points"

[JMJimmy]

Ever played the Mass Effect 1 DLC or the like? 480msp for 2 DLC packs that lasted about an hour combined vs the actual game which cost me the equivalent of 680msp.

I disagree.

[Tei]

Lets suppose you have a website that sell Second Life avatars. You want a avatar to cost 0.30 $, but the credit card 'tax' is 0.20 $. And people buy maybe 20 in a year.
What you can do, is to make so the user buy 30 "points" paying 10 $. And make so every new avatar cost 1 point. You are still paying 0.20$ to the credit card company, but only once. With the other option you pay 0.20 * 20 = 4 $. So is paying 0.20 $ versus paying 4.00 $. Is really better to run with points.

Also, is also better for the user, so he do only one transaction, and from there, he don't have to enter his credit card details. ..that can be annoying.

Re:I disagree.

[Hognoxious]

What you're describing is basically a prepayment system. Replace avatar with phone call and you have a situation that's been in use for years. Yet the phone companies, retarded though they are, seem to able to cope without resorting to points or similar silliness; they just account for your credit in units of cash.

Re:I disagree.

[mwvdlee]

The same benefit could be more easily attained by post-charging on, say, a yearly basis.

IMHO, the key here is two-fold; Batch purchases (part of which will likely not be spent immediately or at all) and a cognitive inability to consider virtual money as having real value.

Re:I disagree.

[Hermanas]

The difference being, in most cases, that phone companies only serve one country, and therefore one currency. Or at least, if you buy prepaid, then it's safe to assume it's for a phone in that country.

Re:I disagree.

[Racemaniac]

The main problem is that they only let you buy points in certain quantities, and then make sure that you always end up with leftovers

If something costs 190 points, you can bet on it that you won't be able to buy exactly 190 points, you'll always have some leftovers.

I think people wouldn't mind the system if you could just buy the exact number of points they want to make their purchases, but you'll never be able to.

It's a small detail that the summary left out, that makes the system work, and that it annoys people :).

Re:I disagree.

[petermgreen]

If you post-charge then you have the issue of high fee percentages for those customers who didn't buy much that year. You also have all the costs of actually getting people to pay (This is especially true for anyone who relies on a third party payment gateway and hence can't easilly collect credit card details first and charge them later)

Re:I disagree.

[Tei]

If you allow people to buy 1 point, it don't work.

Anyway allow people to buy 5, 10, 20 and 100 points still work. But not as good as only allowing people to buy 50 points.

Re:I disagree.

[PopeRatzo]

Lets suppose you have a website that sell Second Life avatars.

Wait, let me kill myself first.

Re:I disagree.

[Anonymous Coward]

Also, charging multiple small transactions to your credit card is sure to result in a hold being put on your card. Happened to me personally when I purchased several $1 or $2 charity facebook gifts back to back. The gift system at the time didn't allow you to purchase multiple gifts at once so I had to buy them individually, triggering anti-fraud measures on my card.

I later had it explained to me by a bank employee. Fraudsters at one point would charge dozens of small transactions (from multiple sources) to an account to bypass automatic security measures triggered with large charges. And since there are few legitimate reasons why someone would charge many small transactions to their account this was an easy fix.

Re:I disagree.

[Anonymous Coward]

replace points with minutes...

Besides the bashing it does have some good reasons

[Anonymous Coward]

well, as microtransactions over creditcard are quite expensive, it makes sense to pay in bigger junks, and "buffer the money".

+ it allows to have one kind of money over different countries which have all different stuff like dollar, euro, swiss francs, etc.

Why is this even legal?

[meist3r]

I am in the process of selling my Wii and thus had to format the memory, back up my savegames and also remove my WiiWare shop account. I realized while doing this that I still "own" 400 points. The least expensive purchases in the Wiiware store are 500 points so I couldn't use those points no matter what without forking over some more cash. Is there a real life equivalent where a company can take my money, convert it into some fantasy credits system and refuse to pay out the excess once I close the account? I know there are some store-credit policies for returns in place with some retailers but I don't see the legal basis for holding a customers money hostage even if it's just a couple of dollars. Especially in a non-physical scenario. I can understand that a retailer doesn't want to hand out cash for failed purchases but in the online world all I'm doing is to convert virtual legal tender into some makebelief play money with which to buy goods. How am I not allowed to revert this transaction? If I have a bank account with an amount non-withdrawable from an ATM (in Germany we don't have single notes) I can always walk into the bank and demand the change upon closing the account. Why is it that video game companies are allowed to keep money that I paid them for services they never intend to fulfill? If I have store credit with a company I can always ask them to give me back my money if I paid for it with my real money. Is this a loop hole or are we just to stupid/convenient to call them out on their bullshit?

Re:Why is this even legal?

[Vectormatic]

buying beer coins at a festival/concert?

I never really tried this, but i could see the organisation refusing to buy back unspent coins

Re:Why is this even legal?

[GuldKalle]

It obviously vary by country, but I think prepaid phone systems have that policy of not wanting to return your cash. If you dump your money, they are gone.
One reason for not paying back (MS points in this case, as i'm most familiar with those), is that the exchange rate varies a lot, depending where you buy them. Sometimes they are even giving them away (in retail games etc). So they don't have one distinct value, and not all the money go to MS.

Re:Why is this even legal?

[Trenjeska]

it shouldn't be legal at any time to do this, _unless_ you can always convert it BACK to hard currency at no cost. [period]

Re:Why is this even legal?

[delinear]

They could mitigate it by allowing points or purchases to be transferred. That way if you want to leave the system you can sell the points on to a third party. The danger there is someone sets up a company allowing micro-transactions of less than the minimum points spend and they manage this by grouping payments up so the games company is only getting the amount of the purchase and doesn't have a slush of currency sitting in their account earning interest, for that reason I doubt we'll ever see this happen.

Re:Why is this even legal?

[js_sebastian]

It obviously vary by country, but I think prepaid phone systems have that policy of not wanting to return your cash. If you dump your money, they are gone.

In Italy the cell-phone companies have been forced to treat money in your prepaid account as real money a few years ago. This means that:

a) they cannot charge you extra money for recharging your account. If you pay 30 euros to get 25 euros credit, that means you end up paying your minutes more than the advertised rates. Not allowed.

b) they have to give you any leftover money back when they close the account.

c) they cannot in practice do promotions where you get free credit with restrictive conditions (as in "Get 100 euros* of credit with your new account". *only valid for calls done on february 29th and lasting between 13 and 14 minutes). Of course, they can and do use some kind of point system for that as well, but they're not allowed to mislead you by calling it money anymore.

Re:Why is this even legal?

[Anonymous Coward]

Is there a real life equivalent where a company can take my money, convert it into some fantasy credits system and refuse to pay out the excess once I close the account?

Yes, it's called a "free" market. They are free to do whatever they want, as long as you click "I agree" and you just described exactly the point. IANAL but it also sidesteps consumer protections such as return policies since you're not paying in "cash".

Re:Why is this even legal?

[Man Eating Duck]

buying beer coins at a festival/concert?

I never really tried this, but i could see the organisation refusing to buy back unspent coins

I have been to a lot of music festivals, and no, they usually don't. I still prefer tokens as opposed to cash for a few reasons:

The queues go a lot faster when the staff don't have to bother with change, and everyone has the "correct" amount. It *really* makes a difference, and it has a huge effect on your enjoyment.

I can keep my wallet somewhere safe, and only keep tokens on my person. This is safer when I am in huge crowds all the time, usually in various states of inebriety.

Outlets for tokens are usually located near every place you can use them, and they accept plastic as well as regular currency. This means that I only need to bring a credit card. There is usually no set minimum amount you need to buy, so if you only need a couple more you can buy that. There is no need to leave the festival with a surplus.

For the organisers there are obvious advantages, probably the least of which is that they will sell a few unused tokens. As you can only use the tokens onsite they need less security at points of sale, they don't even need to trust their employees/volunteers all that much since most of them don't handle cash. They need fewer counters for goods that sell in large volumes, such as beer, as tokens are more efficient in transactions. It's faster to count the registers afterwards. Of course there will probably always be people who buy more than they need as well, but I don't think this amounts to very much, people tend to be very conscious about how many tokens they buy.

All in all, win all around :)

Re:Why is this even legal?

[Anonymous Coward]

They aren't keeping your money hostage. You traded money for a service. The points are just a construct used within the context of that service.

A lot of the reason the transactions are handled in points is likely so they don't have to deal with the laws regarding money and how they vary between jurisdictions. By establishing a system of points, and allowing you to buy points, they can point to the transaction and say "look, he gave us money we gave him points; transaction over. it's not our obligation to buy those points back at a later date.

Re:Why is this even legal?

[metacell]

Well, depending on your jurisdiction, a large part of the agreement you clicked "agree" to may not be valid - there are many consumer protections which are non-negotiable. It's often worth checking if the things you agreed to without reading them will hold up in court.

Re:Why is this even legal?

[sjames]

You can bet that if they could be exchanged for other currencies, MS would soon be swamped by a horde of parasites^wcurrency speculators using high frequency trading to try to wring some cash out of them.

They are over thinking this

[pinkushun]

The fantasy of having your own currency (points) is alluring to people, in thought, but the reality is less fun. With so many monetaries for each network, don't you get confused between their value systems?

I hate it when companies try to be clever by making something complicated.

Re:They are over thinking this

[Anonymous Coward]

don't you get confused between their value systems?

Isn't that one of the points of these systems? Microsoft has an "exchange rate" that makes it look cheaper for example by pricing things 80 points that cost 100 cents.

The more confused you get (exchange rate, fixed-size point bundles, remaining points-credit, etc.) the easier it is to cover up the actual cost of things.

Buffet

[Anonymous Coward]

The all you can eat buffet articule is horrible. It's just one guys story about he ate too much at a buffet. Nothing insightful about cost vs food, watching fat people eat, or the PSN.

Captain Obvious has arrived!

[L4t3r4lu5]

Leaving money on the table or in your Xbox Live account makes most of us a bit uncomfortable (PDF) because it feels wasteful.

This is why you buy points in bundles of 1000, but games are in multiples of 600. It's also why sausages are sold in packs of 8 and finger rolls in packs of 12. People like symmetry and find things which are unequal disconcerting. It's basic retail psychology.

I'm not in any way involved in this kind of thing, but it's so obvious it barely requires mentioning.

Re:Captain Obvious has arrived!

[Anonymous Coward]

It's also why sausages are sold in packs of 8 and finger rolls in packs of 12.

That's why I always eat sausages 24 at a time.

Who's laughing now, smart guy??

Re:Captain Obvious has arrived!

[Anonymous Coward]

Get 5 games and 3 * 1000 points cards.

Buy 3 packs of sausages and 2 packs of rolls.

Doesn't take a genius to figure out that they are trying to get you to buy more games/sausages with this system as you state. In terms of MS Points, you can get 1600 points cards: http://www.amazon.com/Xbox-360-Live-1600-Points/dp/B000B9RI14

thus, you would need to buy 8 games now to clear your account (3*1600 points).

It's all about temptation. You see a game you kind of like, it is 600 points, you only have 400 points but you think it's only another 200 points, that 400 points is already "spent money" thus it is unusable in any other way but to buy XBL stuff...so you get another 1000...now you got enough for two games, but 200 points left over...so you buy another 1000 and can get another 2 games...so you have a minimum spend or lose money...Either you hate to lose 200 points, or you buy more, possibly something you would not otherwise have done...

Re:Captain Obvious has arrived!

[Machtyn]

That's why I always eat sausages 24 at a time. Who's laughing now, smart guy??

It's a good thing they don't sell 10 sausages and 12 finger rolls to a pack then!

Re:Captain Obvious has arrived!

[VGPowerlord]

This is why you buy points in bundles of 1000, but games are in multiples of 600

Actually, this is wrong. You buy points in multiples of 400 (800, 1200, 1600, 2000), while games are priced in multiples of 80.

I'm not saying that you don't end up with excess points, but if you find enough 80-point things (indie games, cosmetic crud like avatar stuff and themes), you can zero it out.

However, there are also promotions that give out strange numbers of points... I had Visa give me 300 MS Points just because I bought 1600 MSP during some event thingy they were doing a few years back.

Re:Captain Obvious has arrived!

[coolmadsi]

This is why you buy points in bundles of 1000, but games are in multiples of 600

Actually, this is wrong. You buy points in multiples of 400 (800, 1200, 1600, 2000), while games are priced in multiples of 80.

Perhaps the OP was thinking of Wii points, I think they are in bundles of 1000 (or at least start at 1000).

Abusing human nature

[Anonymous Coward]

Given that people have this flaw, shouldn't such point systems be illegal?
The way I see it, point systems are taking advantage of a flaw in human nature that probably cannot be fixed even people are made aware of it.

Re:Abusing human nature

[delinear]

The thing is, it benefits us as gamers. Undoubtedbly the games companies are also enjoying the benefit of funds sitting with them, but if you made it illegal, the cost of the smallest transactions would go up because of the credit card charges involved. Overall both the gamers and the games companies would lose out (I doubt the interest on the circa £10 I have slushing about in points at any time would be sufficient to make up for the extra cost of micro transactions if the system was banned), the ones who would stand to gain the most are the credit card companies.

Re:Abusing human nature

[Lumpy]

It benefits me that I have to buy 1600 points at a time?

Sorry but the MSFT system is DESIGNED to make sure you always have leftovers that cant be spent. you have no way of gifting the points to others and no way to spend them unless you want to just waste them on moron things like a new t-shirt for your poor representation of yourself attached to your account.

Let me do a transaction for that item. calculate out the frigging price and charge that. they can easily do it.

Re:Abusing human nature

[Splab]

10 million users with £10 left over means £100.000.000 sloshing around - and remember, they aren't getting the 0.001% interest on their money, they are probably investing that at an 10%+ roi. That is a lot of money.

Re:Abusing human nature

[metacell]

If it was only about avoiding credit card transaction fees, they could have made the point purchases in multiples of game prices.

E.g, a game costs 600 points, and you recharge with 1200 points at a time.

Re:Abusing human nature

[Anonymous Coward]

It benefits me that I have to buy 1600 points at a time?

You don't. Hyperbole is for liars.

Customer hostile bullshit

[syousef]

You've just described one main reason I don't bother with online systems and accounts. Fancy words and phrases that boil down to fooling your customers out of their money and giving them nothing in return. And what happens if the company goes bust? You become an unsecured creditor and get nothing back for your money at all. All the game companies can stick their games points up their arses and spin. FUCK OFF Nintendo, Microsoft, Apple and Sony.

Re:Customer hostile bullshit

[jo_ham]

What have Apple got to do with this?

All their iTMS and App Store purchases are done with actual money.

Or were you just lumping them in for good measure, just because?

Re:Customer hostile bullshit

[shentino]

Actually, it's worse than being an unsecured creditor. They at least get to be in the line at all when court comes up.

The TOS probably states that points can be forfeited/confiscated/adjusted/fucked with for any or no reason.

Re:Customer hostile bullshit

[syousef]

What have Apple got to do with this?

All their iTMS and App Store purchases are done with actual money.

Or were you just lumping them in for good measure, just because?

Never heard of itunes gift cards huh? BULLSHIT, ALL OF IT.

Re:Customer hostile bullshit

[jo_ham]

iTunes gift cards are bought with money, and are exchanged for an identical amount of money and are *totally optional*, and a common feature among almost all large retailers.

You can use the entirety of the iTunes store and App Store without ever using an iTunes gift card. Just like you can shop in any major retailer without ever buying one of their gift cards and using it for your purchase.

Your attempts to just sling mud at Apple for no good reason because of an optional gift card system that works entirely in the currency of the country you're in (ie, you by a £15 gift card [or receive one as a gift] and you redeem it for £15, that stays in those units on the store), as part of a discussion about a story involving the obfuscation of real money behind virtual currency systems like "points" is just laughably thin.

The phrase is "grasping at straws".

Re:Customer hostile bullshit

[VGPowerlord]

What have Apple got to do with this?

All their iTMS and App Store purchases are done with actual money.

What have Valve (mentioned in the summary) got to do with this?

All their Steam purchases are done with actual money.

Except that there's a $5/4 euro minimum when adding money to a Steam Wallet. Strangely, you can buy individual games for less than that with a credit card...

Also, what is it that I need to do to keep /. from changing my Euro symbol to â?

Arcade tokens

[Anonymous Coward]

Nothing really new here. Arcades have been doing something similar with the idea of tokens for decades.

Lower transaction fees

[ivucica]

Could another effect be lowering of their transaction fees? You're no longer paying $0.99, you're now paying $9.99 or so. Plus, this allows easier sale of prepaid cards, doesn't it?

So, they're not ONLY trying to affect your mind, they're also making it cheaper and/or easier for themselves to take your money.

Can buypass this on Playstation

[Anonymous Coward]

Playstation doesn't have Points, it has money, and you can bypass the entire thing and put the purchases right onto your credit card. When you buy something, it lists it's cost in Dollars, not the nebulous points system The only reason Xbox uses it is because it tricks people out of their hard-earned cash. It lowers MICROSOFT's costs for microtransaction, thereby saving THEM money, at the expense of users who aren't sure what the exchange rate is between money and microsoft points. And, like the article says, people don't treat points like real money, and are less afraid of spending it. This is equivalent to having a end with 99.99. Everyone knows it's 100$, but everyone puts it in the less then 100$ thought category.

A lot of people are making fun of PSN lately, but aside from being free, it doesn't trick you into buying things.

The reasons

[tripleevenfall]

1. People spend more when using credit/buying credit in blocks/using anything other than one-time transactions

2. Once you buy a certain amount, you can't get it back, so it makes you spend more than the advertised price for whatever you buy.

3. Most people would rather buy another block of points than let the small amount of leftover points go to waste, which starts the revenue loop again.

Re:The reasons

[erroneus]

4. No refunds allowed! The money is spent on points. Various laws of various lands require the ability to refund under various condition. But since you are just buying points, the medium of exchange becomes "not money" and so those laws tend not to apply. What's more, you cannot "sell" the stuff you buy with MS points to other players and so there is no resale value either.

This all goes to show at a miniature scale what the US Federal Reserve does on a global scale. The medium of exchange on the global currency market is still presently the US Dollar. Guess who controls the US Dollar? Not the US Government. It's the US Federal Reserve Bank. (Recall the recent story discussing the deal among Brazil, Russia, India and China? (BRIC?) We are all buying, selling and "saving" with US Federal Reserve notes and accounts. They set the rules, they set the value and make no mistake about it, they are in control... for now... until people get angry enough.

Re:The reasons

[zevans]

No refunds allowed! The money is spent on points. Various laws of various lands require the ability to refund under various condition. But since you are just buying points, the medium of exchange becomes "not money" and so those laws tend not to apply.

This can't be true. I have given money to a company in return for goods. I don't care how they choose to launder and refactor along the way. I'm sure I could get the reasonable man in the street, and hence a court, to agree with this opinion.

The only response the company can make is to decry that there is a relationship between the goods and the money at all; in which case they're admitting fraud.

Steam

[Anonymous Coward]

The Steam Wallet isn't required. You can easily buy things with real money without the steam wallet. If you put money in your steam wallet for say a TF2 item and you have money left over and later decide to buy a game, the money left over in your wallet gets deducted from the price of the game.

Hot dogs

[debrain]

It's the old 6-buns, 8 sausages trick.

Re:Hot dogs

[Anonymous Coward]

It's the old 6-buns, 8 sausages trick.

this

Re:Hot dogs

[ledow]

I am removing the superfluous buns.
(Father of the Bride)

That's the reason why

[kikito]

I'll never buy games from MSGFW. It feels wasteful.

Re:That's the reason why

[El Capitaine]

This is Xbox Live Marketplace...for Xbox Live Arcade and DLC content. Full games from Xbox On Demand of GFW can be paid directly with a credit card for the exact cash value without any need to use the points system.

Uncomfortable? Does it matter then?

[Errol backfiring]

Leaving money on the table or in your Xbox Live account makes most of us a bit uncomfortable

But having to create such an account would not make us feel uncomfortable then? Having to pay up over the internet to play a game would not make us uncomfortable either? So since when does that matter?

Re:Uncomfortable? Does it matter then?

[Bigbutt]

Crivens! :)

[John]

USD is not the only currency out there

[Anonymous Coward]

Many (probably a majority) of the Xbox live customers live in countries where USD is not the daily currency. To all those people USD isn't 'real money' anyway, and a change from Microsoft points to USD wouldn't make a difference. Also because of different tax rules and so on, a Microsoft point has a different price tag for each country. If they took the full step to using local currencies everywhere, it would make everything worse since press releases, reviews and so on wouldn't be able to state prices properly. If you let people buy 'points' as a product, the price of a point can just vary and all these problems go away.

Also $0,50 credit card purchases don't make sense because of transaction costs. I think we all now that.

Doesn't make me uncomfortable.

[The MAZZTer]

On Steam, you CAN pay in real money. There is a minimum of $5 for Steam Wallet additions and the TF2/Portal 2 stores require Steam Wallet and won't let you purchase directly, but all GAMES on Steam can be purchased for the exact cost without having to deal with virtual currency.

Plus my own usage pattern is to put $5 into my wallet and buy 2 keys for TF2, so I'm left with $0.02. That doesn't make me uncomfortable.

In addition if I buy a game all the money in my Steam Wallet goes toward the purchase BEFORE it resorts to prompting for a credit card number. So whenever I buy a game it routinely cleans out my Steam Wallet anyway (whether I have $2.51 or $0.02) since I don't keep more than $5 in there at any one time (except when those Japan charity hats were available).

Of course the Wii Store is another deal altogether, I think I still have points on there. Of course that doesn't seem to make me uncomfortable either, I consider it wasted money (as if I lit it on fire and threw it away) until I find something worth spending it on.

Stardock / Impulse

[Jaysyn]

It's interesting to me that Impulse started out this way (Stardock Central / TotalGaming.net) & then switched back to real money.

For once, not Sony

[dr.newton]

Sony actually doesn't have a similar system. There are two differences:

1. If your purchase is over $5, you can opt to be charged exactly the amount of your purchase.
2. I see prices in my local currency.

Back in the day when I thought Sony were trying to be the good guys with the PS3 (allowed linux without a fight, let us plug in regular USB peripherals, supported SD and CF cards, supported user-upgradeable hard disks) this was one of the things that made me glad I had bought one.

Seems things have changed a lot in 4 years, but they don't make it difficult to get to a zero balance in my PSN account (when I can access it at all ;) ).

Re:For once, not Sony

[Anonymous Coward]

It seems they don't make it difficult for anyone to get to a zero balance in your PSN account.

Re:For once, not Sony

[CronoCloud]

let us plug in regular USB peripherals, supported SD and CF cards, supported user-upgradeable hard disks

They still do those things. Even if you don't have a deluxe model "Fat" PS3, you can plug in a CF/SD card reader via USB.

Re:For once, not Sony

[Anonymous Coward]

That is exactly how the Steam Wallet works. Uses actual
  currency, you can pay the exact amount over $5. This seems to be a non-story.

Re:For once, not Sony

[Anonymous Coward]

The same good guys who installed a rootkit on your computer, right?

Re:For once, not Sony

[MikeBabcock]

I was going to comment to the same effect, but I'll reply here instead.

Sony doesn't use fake point systems, all their purchases are in real local currency. You can purchase denominations of local currency with PSN cards at the store, like a gift certificate, and then not need a credit card to secure your purchases, but its still stored in real local currency amounts.

Notably, people who used PSN cards don't have to worry about the recent hackers stealing their credit information. Sony often price adjusts as well, which I notice being Canadian, as the local and US currencies fluctuate and game prices will as well.

Taking advantage of the undisciplined minds

[erroneus]

Gift cards are the same game. It's an older game than we know I'm sure. (Tickets at a carnival come to mind as an even older example.) Once money is turned into "not money" there is also a certain disconnect that enables people to spend it more easily in addition to people not wanting to waste the leftovers. (I always give away my left over tickets when leaving a carnival...)

That game no longer works on me. The reality is that the money is already spent -- you don't get it back. I think this is a better mentality to follow as it disables this "uncomfortable" feeling of waste and things left over. The first thing a person must accept is that when you lend someone money, never expect to see it again and at the same time, not be bitter about it. You gave money. It's gone. Once you get past that obstacle of selfishness, the rest is easy.

Learning self discipline and control is difficult. Our parents were supposed to teach us those things but over the past generations, those ideals were forgotten along with the lessons learned from the great depression. (You know, ideas like being is debt is a sin and on and on...) My mother hadn't quite forgotten what her mother taught her and shared a bit of that with me. I still had to learn a lot on my own but not so much as everyone else it seems. The lemmings out there are just eating whatever is being fed to them aren't they...

Re:Taking advantage of the undisciplined minds

[DirkDaring]

Spoken like a Dave Ramsey fan. :) Totally agree with you.

Re:Taking advantage of the undisciplined minds

[Anonymous Coward]

>The first thing a person must accept is that when you lend someone money, never expect to see it again and at the same time, not be bitter about it. You gave money. It's gone. Once you get past that obstacle of selfishness, the rest is easy.

Then it isn't "lending". It's "giving". It's not selfish to openly lend money, and expect it to be paid back. That's called being fair.

And the risk you take in lending someone money should be offset by any interest, so that if you are lending a lot of money to a wide range of people, you are fairly compensated for providing the service.

Americans have such issues with fairness... everything is one extreme or another... it's either you self-sacrifice yourself for the greater good, or you're being selfish. Perhaps there is a healthy middle ground?

Re:Taking advantage of the undisciplined minds

[Anonymous Coward]

Americans have such issues with fairness... everything is one extreme or another... it's either you self-sacrifice yourself for the greater good, or you're being selfish. Perhaps there is a healthy middle ground?

No. Go back to Stalingrad you commie

Re:Taking advantage of the undisciplined minds

[Anonymous Coward]

Having worked as a programmer for a retail establishment, there were a lot of legal issues we had to work through. Depending on jurisdiction there were often times draconian escheatment laws that would force the company to forfeit "abandoned" property to the government, which is why gift cards sometimes state that fees will be charged after a certain amount of time, to keep the account active. I am sure the idea of points that cannot be turned into cash are a way around such confiscation. The fact that it helps a company's bottom line is a bonus.

Re:Taking advantage of the undisciplined minds

[darkgrayknight]

I take this more as, if I'm lending money that actually need, then I shouldn't lend money. If I have extra money I can give to people, then I'll give it. As far as dealing with the point system, I can control myself most days, so I purchase points and keep a good amount of points in my account rather than letting it go to zero. I just treat them like I do money. This is better than credit.

Spending twice

[GuldKalle]

I think there is a part of the psychology that the creators didn't spot: To me, it feels like i'm spending my money two times. First time when i'm exchanging my real-world money for points. And the second time when i'm spending my points on a game.

Alternately: Saving twice

[Anonymous Coward]

I think there is a part of the psychology that the creators didn't spot: To me, it feels like i'm spending my money two times. First time when i'm exchanging my real-world money for points. And the second time when i'm spending my points on a game.

On the flip side of that, it does offer the opportunity to save twice:
- I buy points cards when they're on sale (generally 20% discount)
- I buy games when they're on sale (generally 50-75% discount)

400 points in my account... from a year ago...

[poly_pusher]

This post just got me to check my Games for windows live account. I've had 400 points sitting around for a while. And guess what I forgot about it... Wait... I have credits on my WII account too. And both of these accounts have just barely too little to actually buy anything and I have to buy a set number of points, not the amount remaining for a particular item. There's no good reason why they can't just hook up with paypal or something like that...

The OTHER reason Microsoft does this...

[jonwil]

The OTHER reason Microsoft does this is that it wants something to cost the same amount everywhere in the world.

So something that costs 400 points in the US will also cost 400 points in Canada, 400 points in Europe, 400 points in Australia and so on with the points costing different amounts in each country.

Re:The OTHER reason Microsoft does this...

[Anonymous Coward]

Another thing: they can easily adjust the price per point without affecting the user's mood. Say, this burger cost 10 points now ($10 value), 2 years from now, the burger is still going to cost 10 points, but later 10 points equal to $15 without you knowing. All you know is the burger stays the same price at 10 points.

Re:The OTHER reason Microsoft does this...

[darkgrayknight]

which is why having more points now, or buying when the price per point is low, is a good idea.

Re:The OTHER reason Microsoft does this...

[Torodung]

Yup. It's a fiat currency in a global economy. Early American history similar currencies, in the several states, guaranteed by a variety of banks. When the markets and commerce matured, generally speaking, it caused problems. It was useful before we established a single currency, though. Since I don't quite think we're ready for the "one world" currency yet, this works as a start up, so long as it doesn't become a widespread competitor to traditional money.

Only thing that bugs me is the guarantor of the currency. Microsoft is not a bank, and if they were a bank it would be illegal for them to hold on to your spare change.

There should be a law requiring them to cut you a check for the balance of your account at the current exchange rate, but only in cases where a member permanently terminated their account.

--
Toro

Re:The OTHER reason Microsoft does this...

[Anonymous Coward]

Or maybe they could do 400USD everywhere in the world and let the currency exchange sort it out instead of their own bs where au pays more then the US. To say it gives a single unit of currency and the others buy that currency at a Microsoft determined rate is worse then just picking an international currency and going with that. Redundant and doesn't well reflect what is happening in the real world.

Re:The OTHER reason Microsoft does this...

[Anonymous Coward]

No, they really don't, something that costs 400 points in america costs TWICE as much in Australia because Microsoft conveniently forget to adjust the exchange rate. We've been running the base exchange between AUD and MSP since they launched, 16.50 for 1000 points, that was when teh AUD was 0.75 to the US dollar, 7 years later we're now at 1.10AUD to the USD dollar and we're still paying 16.50 for MSP, that means we're paying almost twice as much for the same amount.

The real reason microsoft wants to use MSP instead of USD (like more reasonable companies like steam) is so they can rort international customers by price fixing.

Re:The OTHER reason Microsoft does this...

[Anonymous Coward]

Correct. 1500 points costs $30AUD ($33USD) = 45points per USD. Source: http://www.ebgames.com.au/xbox360-137707-Xbox-Live-1500-Points-Card-Xbox-360.
1600 points costs $20USD = 80 points per USD Source: http://www.gamestop.com/xbox-360/accessories/xbox-360-live-marketplace-points-1600/84477

Therefore an 80% increase in price per point. What an absolute joke.

They don't want 'points' to register as 'cash'

[DirkDaring]

Paying cash 'hurts'. Paying by credit card hardly hits on the psychological level. Companies know this, you'll buy more when using a credit card. A study http://www.associatedcontent.com/article/142336/do_we_really_spend_more_with_credit.html showed that McDonalds, for example, people spent 12-18% more when paying by credit as opposed to cash. It gets even worse with cell phone transactions where you just 'wave' your phone.

Now you have these points where they don't want you to even think of it as cash. This is really a horrible idea to infuse on the minds of young people, and by young people I mean those in high school / college that don't really understand what all this means.

real money

[Anonymous Coward]

>instead of just letting us pay real money for our purchases
implying Federal Reserve Notes are "real money".

Re:real money

[Anonymous Coward]

implying Federal Reserve Notes are "real money".

implying "real money" means anything other than "can be freely exchanged for goods and services on the open market"

Wonder how many sales are lost because of this?

[grapeape]

I know I lasted with Live about a year..the thing that pissed me off the most was having to buy either 400-800 or 1600 point cards...when the cheapest thing actually worth money was 500 and most games were 1200 so no matter what you either had too few or too many points. I understand why they do it, but I found it particularly annoying and know I cant be alone in that. To me is seemed rather shady and dishonest making me much more conscious about spending money with them.

There's another reason...

[Anonymous Coward]

Another great reason for companies to use these systems is that they're essentially interest free loans! Think about it. You put your money into your account, making it available for immediate use by the company and only redeem your product at a later time. Another great reason to use it is because "points" are utterly worthless! They might as well be giving you wampum! It's also a great way to rip off parents because it disconnects the kids even more from the value of a dollar. It would be truly fascinating to hear the minutes of the meetings or read the research that went into these programs. Were psychologists involved? Probably....

Might be a UK thing...

[MrNemesis]

...but when I buy things from Steam I get the option to buy chunks of £25 or the option to put in the exact amount of money for the current transaction; there's nothing forcing me to put in any more money than I need to like the summary and TFA appear to imply.

Never used the MS or Sony game store things, but I've got a veto on buying anything on a "gift card" basis anyway.

More psychology

[Anonymous Coward]

A downside for the points vendor is that human's feel much less inhibited when it comes to cheating on points-based systems than monetary systems. Most people have some moral difficultly with stealing money, but stealing points does not seem nearly so bad. This has big implications on the potential for fraud.

It's not new

[argStyopa]

Geez people, this isn't new.

Congratulations, you just "figured out" the psychology behind carnival ride tickets.

It's not like it's something every scary, toothless carny has understood for 60+ years.

Steam Wallet is different

[Crass Spektakel]

Steam Wallet is different. You can load it with variable amounts of money while the competitors only accept some values like â5, â10, â20 and so on. So you rarelly end up with money left on the steam wallet.

Also the wallet has another benefit: You can fill it BEFORE buying. Too often I couldn't buy a steam deal because my credit card wasn't accepted for some hours or because I tried to pay british pounds from a euro country and got blocked...

Not to appear like a smug prick, but...

[uberjack]

... Thank you, Captain Obvious

complete and total bullshit

[sgt scrub]

having to sign up for online accounts so you can "register" the game before playing it, bullshit. having to convert currency into proprietary nonrefundable "points" to lock someone in, bullshit. the game distribution/investment industry makes billions of dollars a year. they do not need to squeeze every last penny out of every last customer to profit. fuck them. they are complete and total piles of shit. needless to say, i USED to buy games. the only time i'll put a game cd/dvd into my computer is if someone has and idea on how to crack it. it goes on the machine, gets cracked, uploaded, and removed. that being said, i HAVE been known to buy copies of games that have been released to the foss community as a thank you. maybe they will learn. sony, stream, microcrap, @tari, will never see a dime from my wallet.

Steam

[Anonymous Coward]

Steam also allows you to add the precise amount of funds to your wallet for an in-game purchase, if you desire it. No leftover points.

I've used this a few times with TF2 items: the charity hats for Japan, and stuff which supported the mapping community.

Not the Only Reason

[Phleg]

Disclaimer: I work in a related industry. When I first came on, I asked the question of why we deal with virtual "points" rather than currency directly. Almost everyone agreed that they'd rather bypass the hassle and deal straight with dollars, and convert incoming currency. Unfortunately, doing so would subject us to much stricter, more invasive, and more costly banking and credit card processing regulations. By selling valueless "points" instead of currency, we're simply trading goods like any other merchant.

rounding error

[kisrael]

I'm more concerned about "rounding error", at least for the USD market.
Most people probably use a rough "point = penny" heuristic in their head and call a, say, 1000 point game "about ten bucks". In reality it's about 12.50 though, so they consistently underestimate the cost of everything by about 20%...

it's to videogames what the "and 9/10 of a cent" is to gas... maybe a little more weasle-ish than that.

Skype's more honest

[lucian1900]

For certain corner cases, transaction fees are prohibitively high. And for those, a system like Skype's is much more honest.

You pre-pay in whatever currency you wish at first. All prices are shown in your local/current currency. If you wish to change currency, you must spend all the money you currently have (they could add a transfer option too, I guess).

Always in money, always in your preferred currency.

The real reason

[Anonymous Coward]

they do things this way has to do with banking regulations. When you buy a product (even a virtual one, like points), they don't have to follow any banking guidelines whatsoever (e.g. Reg E). However, if they let money sit there, they must follow many banking guidelines (and probably get a banking license). Plus, inactive accounts with real money in them are subject to escheatment - if the account goes unused for X years, the company is supposed to turn the money over to the "state" and the state is responsible to find the rightful owner and return the money to them.

Re:The real reason

[g0bshiTe]

That's crap. I have a dead account on Paypal that had a few bucks in and I have never had anyone looking for me to return it. So you know it has been unused at least 8 years.

How is this "bamboozled"?

[bickle]

If I but $20 worth of points and purchase $20 worth of content, how am I "getting bamboozled"? This just sounds like people looking for a reason to complain.

Not to mention that you can often find sales on cards so that you can get $20 worth of content for the price of a $15 card.

Missing the whole point

[TiggertheMad]

The reason that companies do this isn't to take advantage of some sort of psychological compulsive need to use up points. It is so that when they sell a game in 15 differing countries with 15 differing currencies their pricing doesn't look like some sort of nightmarish stock exchange. The point cost for a title is fixed across all countries and currencies, and the cost of buying cards or points can be floated against the current exchange rate.

I'm sure that some people will compulsively try to maximize their point spending, but that wasn't the reason why they created the system they way they did.

Re:Missing the whole point

[ipwndk]

If this is the case, then customers would be able to choose exactly how many points they wish to purchase.

Instead the customer is always left with a few extra points, who can then point towards a future purchase.

I prefer paying the exact price. What currency it is doesn't matter.

Re:Missing the whole point

[Dutch Gun]

I agree that's probably the primary motivator. I think it also probably offsets any costs incurred by credit card companies on very small purchases. Don't they have some sort of minimum fee with small transactions?

What the hell?

[g0bshiTe]

This is utter crap. I am less likely to believe that people think leaving $12 or some other amount of money is wasteful, considering you have people shelling out possibly hundreds a month in other games for virtual goods that will never really have real world value, and if the game ever goes tits up, you are just assed out. That's not even diving into the Gift Card area, where it's common to have a dollar or two left on a card due to not being able to purchase anything with it.

Legal tender for all debts public and private

[Torodung]

I'll see your Microsoft Points, and raise you my war chest of Confederate dollars. Given entirely imaginable conditions, they're fungible.

There is a reason we established a unit of currency valid "for all debts public and private." Our "Legal Tender" used to be redeemable for gold, but never mind. Making people convert universal US$ into Disney Dollars, or Target gift cards, or Wii Points just fragments trade, and clogs commerce. Right now, it's just for hobby games, but if it spreads to more vital areas of the economy, it doesn't bode well. People suddenly start engaging in arbitrage, as we saw in the gift card markets, and then valuation becomes volatile. Money's greatest advantage, beyond its being legal tender, is that it is generally not volatile. When it is, it is seen as a fiscal management failure.

Or, for another example, just ask anyone who's on Food Stamps, when what they needed was bus fare to get to their job interview.

--
Toro

International Sales

[Anonymous Coward]

The advantage of banking minor amounts of money (even leveraged over several million users) is minor.

The advantage is using a single advertising campaing internationally with the same price point, you just charge a different price in each market for your Microsoft Points.

Points != anything

[Anonymous Coward]

The whole idea behind the MS points system is that when you spend points you don't think about how much money you are spending. MS points aren't close to 1:1 or 1:1.5 with any major currency. There was an article about this when they first announced how much the points were going to cost and how smart of a business desicion it was. Now most /. can figure out how much they are spending with a little math but the general public doesn't do math.

This is one of the basics of using real money vs credit. If you only spend real money in your wallet vs charging to your card you are more likely to feel guilty about buying stuff and you will spend less money. Now going from credit to points takes it another step to the point were the link between real money and points is very blurred.

Lastly you need some kind of points system for these games since a lot of the people spending the points are kids and you don't want them to just be able to charge anything to your cc. Sure you could have it step up so you could put X amount of $ on the account but then you would lose out on the other stuff.

Author name

[Anonymous Coward]

If you read the by line you would see that the authors name is Jamie Madigan not james

Sony's System is different.

[Anonymous Coward]

Sony allows you to purchase items to the cent with your credit card. I bought 10.98 in DLC the other day for exactly 10.98 to my card.

Nintendo is also changing the way they do things to this more straightforward method, it begins with the 3DS store items this month. Expect Nintendo Tech 6 (Project Cafe) to do the same.

The Sony solution is...

[zevans]

... to give your credit card details out to passing strangers. Problem solved.