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The Psychology of Steam Wallet & Microsoft Points

Soulskill posted more than 3 years ago | from the nickels-and-dimes dept.

The Almighty Buck 190

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."

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Not to mention (5, Insightful)

Hermanas (1665329) | more than 3 years ago | (#36080670)

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 (1)

sgbett (739519) | more than 3 years ago | (#36080896)

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 (0)

Anonymous Coward | more than 3 years ago | (#36081260)

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 (1)

piripiri (1476949) | more than 3 years ago | (#36081076)

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 (1)

twistedsymphony (956982) | more than 3 years ago | (#36081240)

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 (1)

Luckyo (1726890) | more than 3 years ago | (#36081576)

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 (1)

sglewis100 (916818) | more than 3 years ago | (#36081662)

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 (1)

Obyron (615547) | more than 3 years ago | (#36081278)

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 (1)

Dunbal (464142) | more than 3 years ago | (#36081370)

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...

Err, hello America, rest of the world here (4, Insightful)

Anonymous Coward | more than 3 years ago | (#36080684)

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 (2)

Xest (935314) | more than 3 years ago | (#36080766)

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 (1)

Vectormatic (1759674) | more than 3 years ago | (#36080794)

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 (1)

delinear (991444) | more than 3 years ago | (#36080890)

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 (1)

Moryath (553296) | more than 3 years ago | (#36081028)

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 (1)

RoFLKOPTr (1294290) | more than 3 years ago | (#36081060)

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 (2)

Ironhandx (1762146) | more than 3 years ago | (#36081124)

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 (0)

Anonymous Coward | more than 3 years ago | (#36081334)

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 (1)

mehrotra.akash (1539473) | more than 3 years ago | (#36081558)

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 (1)

sglewis100 (916818) | more than 3 years ago | (#36081690)

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 (1)

Xest (935314) | more than 3 years ago | (#36080952)

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 (1)

DrXym (126579) | more than 3 years ago | (#36081140)

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 (1)

Xest (935314) | more than 3 years ago | (#36081234)

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 (0)

Anonymous Coward | more than 3 years ago | (#36081352)

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 (0)

Anonymous Coward | more than 3 years ago | (#36081392)

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 (1)

meist3r (1061628) | more than 3 years ago | (#36080802)

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 (1)

binkzz (779594) | more than 3 years ago | (#36081196)

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 [steampowered.com] 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 (1)

Aladrin (926209) | more than 3 years ago | (#36080814)

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

Re:Err, hello America, rest of the world here (1)

91degrees (207121) | more than 3 years ago | (#36080848)

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 (1)

Rogerborg (306625) | more than 3 years ago | (#36081156)

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.

I hate any system where you can buy "points" (5, Insightful)

Chrisq (894406) | more than 3 years ago | (#36080686)

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" (0)

x*yy*x (2058140) | more than 3 years ago | (#36080738)

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" (1)

Lumpy (12016) | more than 3 years ago | (#36081034)

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" (0)

x*yy*x (2058140) | more than 3 years ago | (#36081052)

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

Re:I hate any system where you can buy "points" (1)

Dunbal (464142) | more than 3 years ago | (#36081396)

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" (1)

sosume (680416) | more than 3 years ago | (#36080878)

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" (1)

x*yy*x (2058140) | more than 3 years ago | (#36080892)

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" (1)

daid303 (843777) | more than 3 years ago | (#36081176)

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" (1)

Lumpy (12016) | more than 3 years ago | (#36081044)

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" (1)

weicco (645927) | more than 3 years ago | (#36081088)

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).

I disagree. (4, Informative)

Tei (520358) | more than 3 years ago | (#36080698)

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. (3, Interesting)

Hognoxious (631665) | more than 3 years ago | (#36080724)

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. (1)

Hermanas (1665329) | more than 3 years ago | (#36080742)

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. (1)

mwvdlee (775178) | more than 3 years ago | (#36080730)

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. (1)

petermgreen (876956) | more than 3 years ago | (#36080818)

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. (2)

Racemaniac (1099281) | more than 3 years ago | (#36080754)

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. (1)

Tei (520358) | more than 3 years ago | (#36080882)

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. (1)

PopeRatzo (965947) | more than 3 years ago | (#36081000)

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

Wait, let me kill myself first.

Re:I disagree. (0)

Anonymous Coward | more than 3 years ago | (#36081530)

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.

Besides the bashing it does have some good reasons (0)

Anonymous Coward | more than 3 years ago | (#36080708)

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.

feedback (-1, Offtopic)

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Why is this even legal? (1)

meist3r (1061628) | more than 3 years ago | (#36080748)

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? (1)

Vectormatic (1759674) | more than 3 years ago | (#36080824)

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? (1)

Man Eating Duck (534479) | more than 3 years ago | (#36081300)

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? (1)

GuldKalle (1065310) | more than 3 years ago | (#36080834)

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? (1)

delinear (991444) | more than 3 years ago | (#36080950)

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? (4, Informative)

js_sebastian (946118) | more than 3 years ago | (#36081120)

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? (1)

Trenjeska (306132) | more than 3 years ago | (#36080914)

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? (0)

Anonymous Coward | more than 3 years ago | (#36081212)

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? (0)

Anonymous Coward | more than 3 years ago | (#36081532)

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.

They are over thinking this (2)

pinkushun (1467193) | more than 3 years ago | (#36080762)

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 (1)

Anonymous Coward | more than 3 years ago | (#36080822)

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 (0)

Anonymous Coward | more than 3 years ago | (#36080784)

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! (1)

L4t3r4lu5 (1216702) | more than 3 years ago | (#36080820)

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! (0)

Anonymous Coward | more than 3 years ago | (#36080990)

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! (1)

Machtyn (759119) | more than 3 years ago | (#36081374)

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! (0)

Anonymous Coward | more than 3 years ago | (#36081040)

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...

Abusing human nature (0)

Anonymous Coward | more than 3 years ago | (#36080840)

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 (1)

delinear (991444) | more than 3 years ago | (#36080996)

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 (1)

Lumpy (12016) | more than 3 years ago | (#36081086)

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 (1)

Splab (574204) | more than 3 years ago | (#36081496)

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.

Customer hostile bullshit (0)

syousef (465911) | more than 3 years ago | (#36080842)

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 (1)

jo_ham (604554) | more than 3 years ago | (#36080888)

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 (1)

shentino (1139071) | more than 3 years ago | (#36081058)

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.

Arcade tokens (0)

Anonymous Coward | more than 3 years ago | (#36080852)

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

Lower transaction fees (1)

ivucica (1001089) | more than 3 years ago | (#36080864)

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 (0)

Anonymous Coward | more than 3 years ago | (#36080870)

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 (1)

tripleevenfall (1990004) | more than 3 years ago | (#36080920)

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 (1)

erroneus (253617) | more than 3 years ago | (#36081276)

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.

Steam (0)

Anonymous Coward | more than 3 years ago | (#36080984)

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 (1)

debrain (29228) | more than 3 years ago | (#36081018)

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

Re:Hot dogs (0)

Anonymous Coward | more than 3 years ago | (#36081130)

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

this

Re:Hot dogs (1)

ledow (319597) | more than 3 years ago | (#36081154)

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

That's the reason why (1)

kikito (971480) | more than 3 years ago | (#36081070)

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

Re:That's the reason why (1)

El Capitaine (973850) | more than 3 years ago | (#36081444)

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? (1)

Errol backfiring (1280012) | more than 3 years ago | (#36081114)

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? (1)

Bigbutt (65939) | more than 3 years ago | (#36081366)

Crivens! :)

[John]

USD is not the only currency out there (0)

Anonymous Coward | more than 3 years ago | (#36081150)

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. (2)

The MAZZTer (911996) | more than 3 years ago | (#36081168)

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 (1)

Jaysyn (203771) | more than 3 years ago | (#36081172)

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 (2)

dr.newton (648217) | more than 3 years ago | (#36081178)

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 ;) ).

Taking advantage of the undisciplined minds (3, Insightful)

erroneus (253617) | more than 3 years ago | (#36081224)

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 (1)

DirkDaring (91233) | more than 3 years ago | (#36081644)

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

Spending twice (1)

GuldKalle (1065310) | more than 3 years ago | (#36081336)

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 (0)

Anonymous Coward | more than 3 years ago | (#36081450)

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... (1)

poly_pusher (1004145) | more than 3 years ago | (#36081486)

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... (2)

jonwil (467024) | more than 3 years ago | (#36081552)

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.

They don't want 'points' to register as 'cash' (1)

DirkDaring (91233) | more than 3 years ago | (#36081556)

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 (0)

Anonymous Coward | more than 3 years ago | (#36081562)

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

Wonder how many sales are lost because of this? (1)

grapeape (137008) | more than 3 years ago | (#36081582)

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... (0)

Anonymous Coward | more than 3 years ago | (#36081660)

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....

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