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Why Xbox Live Doesn't Take Exact Change

Zonk posted more than 6 years ago | from the they-want-to-make-more-money dept.

233

With ever-more tempting content on Xbox Live (like the awesome Exit), it's really frustrating to have to 'overpay' and buy Points in bulk. 1up got an official response from Xbox 360 group product manager Aaron Greenberg on that issue, explaining why the service always leaves you with a little bit left over: "The reason why we do that, the core reason, is around credit card transaction fees ... If we do this in bulk, we don't have to burden the consumer with the transaction fees, or ourselves or publishers. It's about keeping infrastructure costs down and I know sometimes it's frustrating because you end up with odd points, but we don't have any plans to change that." Greenberg also addressed why the service limits you to 100 friends on your friends list.

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understandable but also inexcuseable (1)

pxuongl (758399) | more than 6 years ago | (#21661615)

i think the difference is in not doing something because it's right vs. doing something because it's so small that 99% of people out there won't notice.

it's like mail-in rebates.... i've worked at a fortune 50 computer company, and the exact to the tenth of a penny cost of rebates have already been factored into every budget up through the supply chain.
they're so immutable as to never even be questioned.

rebates (2, Interesting)

Psychofreak (17440) | more than 6 years ago | (#21662297)

At least you don't work in the recreational marine industry. ITT/Jabsco reports over 60% compliance with their rebates (sadly I have no reference other than several reps word) Garmin, Raymarine, and Dometic report similar values. Across all retail the value is around 10% or less.

Phil

Translation (4, Insightful)

acvh (120205) | more than 6 years ago | (#21661625)

"We make more money this way."

Re:Translation (5, Insightful)

Joe Jay Bee (1151309) | more than 6 years ago | (#21661669)

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

Re:Translation (-1, Troll)

HappySmileMan (1088123) | more than 6 years ago | (#21661711)

It's about Microsoft's love of scamming people and stealing. Don't claim otherwise, just agree with it and don't try explain or prove anything, that's how you earn karma points here.

Re:Translation (2, Interesting)

acvh (120205) | more than 6 years ago | (#21661775)

I can think of a few possible alternatives:

let users run a tab, and bill their card when the tab hits a certain amount.

set up a bank. don't charge yourself for credit card processing.

Re:Translation (1)

ByOhTek (1181381) | more than 6 years ago | (#21661889)

The tab probably wouldn't work - I could see users switching when their tab gets below a certain point, and there's a lot of time where the user is getting something for "free", when MS could be using that money to make more money.

A more rational point would be a minimum purchase: If a point is $0.01, then a minimum of 500 points per purchase is allowed.

But actually, the assumption of MS is probably this:
1) The users won't use less than $X to reinvest and make money off of it anyway
2) n users * $X = a fair profit from reinvestment
3) Since the users can buy points in increments of $X, they'll never actually overpay more than $X for long.

Find an appropriate value of $X where they can roughly offset the transaction cost with the return of #users * $X, make payments be in increments of $X

Re:Translation (1)

Joe Jay Bee (1151309) | more than 6 years ago | (#21661999)

set up a bank. don't charge yourself for credit card processing.

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

Anyway, banks are bad enough without Microsoft running one... :P

Re:Translation (3, Informative)

king-manic (409855) | more than 6 years ago | (#21662925)

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

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

E-commerce does vary and does have many per transaction set ups but I fail to believe MS would not have a more preferable contract.

Re:Translation (1)

fimbulvetr (598306) | more than 6 years ago | (#21662991)

LOL - Run a tab? Jesus that's stupid. You want them to _extend_ credit? Based on what? Happy Meal Toy assets?

Setup a bank? Are you fucking kidding? Did you realize what sort of infrastructure CC companies need to have? You don't just "set one up because we want to save some dough on MS Live".

Re:Translation (1)

francisstp (1137345) | more than 6 years ago | (#21663309)

The tab is a good idea if transaction fees are extremely high compared to the value of the transaction itself. Extending credit on a $0.15 transaction makes sense if you end up saving $0.50 in fees.

The problem begins when credit is extended on larger sums. Then the cost of granting credit gets prohibitively large (e.g. 20% annual rate on 100$) compared to the savings in transaction fees.

Re:Translation (1)

onecheapgeek (964280) | more than 6 years ago | (#21661957)

Insightful.

I went to a gas station and tried to buy a drink and some chips with my debit card. They don't do cards on purchases less than $5. The transaction fee is prohibitively expensive on small purchases, wiping out any profit from the sale.

Re:Translation (3, Informative)

plague3106 (71849) | more than 6 years ago | (#21662139)

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

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

Re:Translation (1)

ByOhTek (1181381) | more than 6 years ago | (#21662273)

what about stores that charge a special fee for purchases under a certain amount?

I went to a store once,a nd they charged $1.50 for any purchase under $5.00 on a credit card.

Re:Translation (1)

mjpaci (33725) | more than 6 years ago | (#21662405)

Are you in the USA? I tend to think that that policy is against their Terms of Service...

Re:Translation (1)

jcnnghm (538570) | more than 6 years ago | (#21663413)

That is almost always against the terms of service. They can be reported and fined, and in some cases there agreement can be dropped altogether. Having said that, I don't blame them, it costs as much as 50 cents a transaction to except credit cards, so on a $5 purchase, that's 10% right off the top.

Re:Translation (1)

Richard_at_work (517087) | more than 6 years ago | (#21663257)

Visa merchants aren't allowed to set a minimum purchase amount, but many online retailers are not Visa merchants, as they use a third party processing merchant, and thus they can set whatever limit they wish.

Re:Translation (1)

Richard_at_work (517087) | more than 6 years ago | (#21663665)

Oh, also, many merchants can get away with this by simply not having any low value items for sale - in this case, MS don't have to set a limit as their cheapest product (points bundle) is the limit.

Re:Translation (3, Informative)

rgbscan (321794) | more than 6 years ago | (#21663715)

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

Re:Translation (5, Insightful)

peragrin (659227) | more than 6 years ago | (#21662499)

three words.

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

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

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

Re:Translation (1, Informative)

MBraynard (653724) | more than 6 years ago | (#21662891)

No, no, not really.

The problem is that there is a transaction FEE and a transaction PERCENTAGE on the transaction. The percentage isn't an issue, it's the same whether you buy 800 points of 80 points eight times.

But if you buy the 80 points x 8 the fixed fee is MORE than the 800 points. So MS avoids this by making you buy a minimum number of points, else they loose more money.

really, I think this is a lot about nothing. Eventually the points get spent.

Re:Translation (4, Insightful)

VertigoAce (257771) | more than 6 years ago | (#21662929)

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

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

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

Re:Translation (1)

SuperKendall (25149) | more than 6 years ago | (#21663829)

Apple counts on customers buying multiple songs during the same day. They will group all of the tracks together over the course of a day or so and send one transaction to the credit card company.

Yes they do, but...

With the point system, MS can post a piece of content globally and list the price as 400 MS Points. In the US, I know this is $5.

As you note, a price of something on live is around $5 or so. Are people, on average, buying more than five songs per day from iTunes? I doubt that is the case.

They also sell TV shows, a case where you are a lot more likely to purchase just one or two over the course of a day - again less than $5.

Re:Translation (5, Insightful)

MooseMuffin (799896) | more than 6 years ago | (#21662801)

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

Re:Translation (1)

Joe Jay Bee (1151309) | more than 6 years ago | (#21663265)

Well, if you think of it logically, the points are really a pseudo-currency used only on the XBox system; not really worth their while to give out discounts.

Put it another way: if you have a prepay mobile phone, you don't get a bulk discount if you top up loads during the month. And if I top up my prepay Starbucks card by £100 they won't give me another £10 just because the transaction costs are lower than me topping up with a tenner ten times. Same deal.

Re:Translation (1)

G Fab (1142219) | more than 6 years ago | (#21663133)

Don't the credit card companies charge a percentage? Isn't Microsoft able to negotiate with these companies?

Sony seems to do a better job here by taking exact change or letting you add as much as you want. Except you can't get a gift card to the playstation network, which I guess is bad for the kiddos.

Microsoft could easily allow you to buy 100$ gift cards at a 5% discount, and also take exact change (but everything in the store is not 5% more expensive). That way, everyone is served. The current scheme is clumsy.

Re:Translation (1)

pxuongl (758399) | more than 6 years ago | (#21661679)

or in movie banking fraud talk, microsoft has figured out how to accrue and aggregate all those fractions of a penny that usually get rounded off.

Re:Translation (1)

kiehlster (844523) | more than 6 years ago | (#21661797)

Clearly this is to offset the cost of the red ring of death.

That's just unfair. (1)

i kan reed (749298) | more than 6 years ago | (#21662007)

Many many many retail establishments prohibit you from making credit card purchases under $5 because they actually lose money on the transaction thanks to fees. Nintendo does the exact same thing with Wii Points, except you can't purchase those through your console, which allows a greater freedom for input when purchasing online, though I'm sure there's a minimum. The alternative is to raise prices, or using a horrifying shopping-cart type system which users would abhor.

Re:That's just unfair. (1)

edwdig (47888) | more than 6 years ago | (#21662231)

Nintendo does the exact same thing with Wii Points, except you can't purchase those through your console, which allows a greater freedom for input when purchasing online, though I'm sure there's a minimum.

Huh? The Wii Shop Channel lets you buy points in amounts of $10, $20, or $40. Or you can buy cards with points at retail stores. How else are you buying points?

Re:That's just unfair. (4, Insightful)

joggle (594025) | more than 6 years ago | (#21662561)

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

Oblig. Penny Arcade (1)

PlatyPaul (690601) | more than 6 years ago | (#21663125)

It's the Devil [penny-arcade.com] running the show....

Similarities (or trolling, here in /.) (1)

xtracto (837672) | more than 6 years ago | (#21662089)

Yeah, similarly to the question of:
Why are the Nintendo VC games so overpriced, or the Wii points.

Seriously, with great things as Emulators and torrents I do not understand why do they sell games at £7 each!

Re:Translation (1)

Bill, Shooter of Bul (629286) | more than 6 years ago | (#21662393)

I think the real reason, is to avoid angry complaints when you have to spend more per point the fewer points you'd buy. If they just passed the transaction costs on to the user, it would get wierd. I don't use box so these values are fictitious, but you could end up spending a buck on 50 points or 1,000 points for $10. It would look like they were ripping you off, and there would be a sliding scale if you could specify the number of points you bought. probably not worth the customer complaints of curious pricing. And yes it also makes them more money.

What a load of crap! (4, Insightful)

nickj6282 (896871) | more than 6 years ago | (#21661647)

What a load of PR crap! We know why you can only "buy in bulk", it's because very few things on XBL come out in 500 point increments. You almost always buy more than you need, but then next time if you're 20 points short for what you want to purchase, you get more and have a 480 point surplus. It's obviously specifically designed to be a vicious cycle of always having either too much or being just short.

The iTunes store doesn't have an issue selling me downloads a buck at a time, obviously the credit card fees aren't breaking their balls. WTF Microsoft?

Re:What a load of crap! (1)

TooMuchToDo (882796) | more than 6 years ago | (#21661735)

Obviously, Apple was able to work out a better credit card processing deal then Microsoft was. Also, remember iTunes does a huge volume. Xbox Live? Not so much. Other companies do the same thing to handle the processing costs (Enom, the domain registrar comes to mind). If you don't like it, don't use them, but don't whine about it if they've stated they're not going to change it.

Re:What a load of crap! (1)

LwoodY2K (1199985) | more than 6 years ago | (#21661929)

itunes also groups individual song purchases into bundles of some sort (in large part because of this, I'd suppose)

Re:What a load of crap! (1)

TooMuchToDo (882796) | more than 6 years ago | (#21662041)

If they've made a deal with a processing company, they can bundle all of the charges together during their nightly settlement run and get a lower per-transaction charge (as the transaction charge/percentage is calculated by volume with most processing companies).

Re:What a load of crap! (1)

ECMIM (946033) | more than 6 years ago | (#21662131)

As if they aren't doing this right now? It's not as if MS is stupid (at least not in this regard.)

Re:What a load of crap! (1)

TooMuchToDo (882796) | more than 6 years ago | (#21662327)

They probably ARE doing this now, but don't have the same volume as iTunes.

Re:What a load of crap! (0)

Anonymous Coward | more than 6 years ago | (#21662013)

The heck? "Don't continue to express your displeasure if they've said they're going to keep costing you money".

Err. Not, of course, that I'm someone who plans to purchase an XBox 360, but... wrong.

Re:What a load of crap! (1)

G Fab (1142219) | more than 6 years ago | (#21663237)

hmmm somehow sony was able to work out a better credit card deal too. "obviously."

Naw, MS is doing what it usually does, bilking you with sleazy lame deals like this. Since I bought my first game online for my 360, I have NEVER had a zero balance again. Since I bought my PS3, I have always had a zero balance.

MS could easily incentivize buying in bulk without screwing customers with useless change. Just give a 5% discount on 100$ "gift cards" and charge 5% more for everything. They don't do that because it would take away that incentive to spend that last little bit of "free" money you have left over from the last transaction, (forcing you to add more money that you might see as "Free" next week). Very clever, very lame, very MS.

I really am glad MS is slipping. They had this console war won, and still have the best variety of games, but if they ever dominated, you can guarantee to see this kind of sleaze in every aspect of their system. Sony may be run by morons, but at least Nintendo and Microsoft obviously were able to thrive in a competitive environment. MS proves, time and time again, that they will take that extra step to screw you and their competition.

I probably sound a bit rabid, but I'm right. MS wants a subscription model for everything. Imagine paying for each game like you pay for WoW. So profitable. Can't happen as long as there is a playstation.

Re:What a load of crap! (0)

Anonymous Coward | more than 6 years ago | (#21661877)

iTunes doesn't do a transaction for every song purchased though. It waits for some transactions to build up then charges you. Microsoft can't do that very easily though because most people don't buy things off of Live often enough to make a difference. I can't say for sure that is why, but its certainly a viable reason.

Re:What a load of crap! (4, Informative)

CatPieMan (460995) | more than 6 years ago | (#21661927)

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

No, there really is something to this (3, Insightful)

Sycraft-fu (314770) | more than 6 years ago | (#21662145)

Credit card processors charge you a per transaction fee. That is just how it work, that is how they make money. Every time you accept money, regardless of the amount, on a card they charge you. That's why you'll find restaurants with things like "$5 minimum credit card purchase." At a certain point you literally don't make any money on a transaction because the fee eats it all up.

So, suppose MS allowed you to buy points in arbitrarily small amounts. This is going to decrease the amount they make because people will do it. There will even be transactions (like people buying 1 point) that they lose money on. This means they have three choices:

1) Make less money. They aren't going to pick this. XBL is not run as a public service, they are in this to make money. As a practical matter they need a net profit here to help offset the costs of the Xbox hardware.

2) Pass the costs on to their developers in the form of lower payments. Bad option, you don't pay enough, people just won't develop for XBL.

3) Pass the cost on to the consumer. This is what would happen.

It is the same problem with micro-payments you've seen elsewhere. If you want to have small payment increments, credit card fees can kill that. This is one solution to the problem. Maybe not the best solution, but then if you've got a better one perhaps you should propose it to them? "Just eat the fees and make less money," isn't a solution.

Please remember: If you disagree with their business model, you are free to not buy their products. The Xbox in general, and certainly XBL and the marketplace, are not necessary to life. You can just not play their game if it is unacceptable to you.

Re:No, there really is something to this (1)

nickj6282 (896871) | more than 6 years ago | (#21662485)

Well for the record, I don't purchase MS Points. All the points on my account were either gifted to me or I received for free through other means.

I personally like the model where I make purchases whenever and get charged once at the end of the month. What's the problem with that? They are already charging me $5.99/month on my credit card for the Gold-level service, why can't they send me a statement the week before detailing my downloads and how many points I am purchasing, then tack it on to the monthly charge?

Even better is to implement both systems. It can be another perk for having a gold account. Silver members buy points through the current method, and good-standing gold members can do it the way I've outlined above? This saves them the processing fees and me the annoyance at having 260 points on my account and nothing to spend them on. Hypothetically (obviously not in my case) that's $3.20 that could be in my savings account rather than in Microsoft's.

Because then you are extending credit (1)

Sycraft-fu (314770) | more than 6 years ago | (#21663481)

There's a whole mess of issues that come with that. In the case of the gold service it is payment up front for service. You give them your money, you get service for a month. It's all paid ahead of time. You choose not to give them money next month, that's ok, they already got money for what you used.

What you are talking about reverses it though. You get the items (or rather the bits) first, then only later do you have to pay for them. Same system as a credit card, buy now, pay later. Ok fair enough but there's a host of issues (including legal) that come with that and you can understand why MS would not be interested in getting in to that.

A simple one would be the one faced by every creditor of what happens if people exercise the credit and then fail to pay? What do you do then? I'm not going to cover all the situations, you can look it up yourself, however in MS's case collections could become an interesting problem. With a physical good there's the ability to get a court order to get the good back. Can't really do that with bits so easy.

It would also probably make it extremely more complicated to get an XBL account. Every service I have that extends me credit in some way, I had to jump through some hoops to get. For my credit cards, they needed a background check and an agreement to a contract. For my natural gas service, they wanted a deposit (and not a small one) for a year while I proved my payment history with them. My mortgage, well we won't even get in to all the crap that entails.

That isn't what you want for a service like XBL. You don't want to have to have a credit check or have to put down a $100 deposit. However, that is what it would entail if they did as you suggested and extended credit.

Re:No, there really is something to this (2, Insightful)

Pluvius (734915) | more than 6 years ago | (#21662573)

4) Don't have a point system. Where did people get the idea that you have to have a point system for online transactions? Just charge people whatever the item is worth and you won't have "people buying 1 point."

Rob

Re:No, there really is something to this (1)

GeekZilla (398185) | more than 6 years ago | (#21662761)

Damnit! And me with no mod points.

Re:No, there really is something to this (1)

Jonathan_S (25407) | more than 6 years ago | (#21663227)

4) Don't have a point system. Where did people get the idea that you have to have a point system for online transactions? Just charge people whatever the item is worth and you won't have "people buying 1 point."
Not as low as 1 point, but I've seen some things on XBL marketplace for 20 points. That works about to about $0.25. Not exactly cost effective to handle as a credit card transaction.

So assuming that Microsoft doesn't want to hand out credit to every xbox live member, there are only two practical ways to handle this.
1) Artificially bundle cheap content together until there is enough of it that the cheapest collection or item you can buy is expensive enough to be cost effective to handle as a credit card transaction.
-or-
2) Force people to pre-pay in large enough increments that it's cost effective to handle as a credit card transaction. But once you've done that it doesn't much matter if you track that pre-paid value in dollars, points, credits, or Galleons/Sickles/Knuts.

Re:No, there really is something to this (1)

Pluvius (734915) | more than 6 years ago | (#21663643)

3) Charge monthly. This would reduce the amount of transactions that are below a certain amount, especially since a lot of people who are interested in buying things are already paying for XBox Live access anyway.

Rob

Re:No, there really is something to this (1)

bit01 (644603) | more than 6 years ago | (#21663797)

3) Deduct credit card monthly. If it's too small in any one month let it roll over to the next month or drop it for the good will. Just like the phone, utility and every other service company on the planet.

4) Pass on any extra costs to the customer, give the customer options and let the customer decide. Just like every mail order company on the planet.

This is not rocket science. This is typical M$ "I don't mind and you don't matter" manipulativeness. No wonder many people detest them.

---

Astroturfing "marketers" [wikipedia.org] are liars, fraudulently misrepresenting company propaganda as objective third party opinion.

That forces minimum prices (1)

Sycraft-fu (314770) | more than 6 years ago | (#21663357)

The idea behind something like this is to be able to charge less than you would with a normal credit card transaction, the whole micro payment idea. If you make everything a CC purchase then those fees get factored in and you discover that things cost more, and there aren't things available for really cheap.

As an example: Suppose you offer something for download from your site. You want to try to recoup bandwidth costs, which you calculate to be about 2 cents per DL. So you charge people for it. No big deal, it is a tiny amount of money, most people shouldn't have a problem. It is a micro payment.

However, you discover that every time you take a credit card, you get hit with a 40 cent fee, on top of the money you already pay for the CC processing. It actually COSTS you money to charge people 2 cents. So you have to up your price to cover the transaction fee, the service fee and the money you want to make. All of a sudden, your downloads aren't so cheap. Your idea of micro payments goes away, because it just costs too much. You either have to go to free and eat the costs, or start charging a lot more than you want to.

Well a points network like they do on XBL allows for the mitigation of that. There are way less CC fees since there are less transactions. You can make micropayments and not get screwed over. MS just adds up the amount of points spent to a given source and cuts them a check for that much.

As such it keeps costs down on the individual items. If you start doing the CC transaction per thing, that fee is going to get figured in and will hit you in the form of increased costs. On higher dollar items, it probably won't change anything, but on smaller stuff it'll show up. Things will be $2.50 (or more likley $3.00) instead of $2.00.

Do some research in to it and you'll find that the whole CC transaction fee has been a real problem for micro payments and merchants have been mulling what to do about it for a long time. There's a market for cheap stuff online, but it is hard to make it cheap enough when you get bled dry by transaction fees. A points system like this is one solution to the problem. Perhaps not the ideal one, but I've yet to hear a better one.

Re:No, there really is something to this (1)

Zalbik (308903) | more than 6 years ago | (#21663135)

But the obvious solution in this case (that I'm certain has been pointed out in other posts that I'm too lazy to read) is as follows:

Require a minimum number of points to be purchased in any one transaction. I think this would make consumers more happy & actually INCREASE the amount of money Microsoft makes

Suppose the minimum purchase is 1000 points and that most stuff costs around 800 points.

Then if I have 100 points in my account, I can buy 1500 points and get TWO games, rather than just spend 1000 and let the other 300 rot.

It's not like the actual content is costing them anything. It's just a dumb system.

Re:What a load of crap! (0)

Anonymous Coward | more than 6 years ago | (#21662261)

Its like when you can only buy a buy a minimum of 10 tokens at at festival, with prices of beer and food stacked to be out of synch, to keep the punters buying in bulk.

Re:What a load of crap! (1)

Tetsujin (103070) | more than 6 years ago | (#21662941)

What a load of PR crap! We know why you can only "buy in bulk", it's because very few things on XBL come out in 500 point increments. You almost always buy more than you need, but then next time if you're 20 points short for what you want to purchase, you get more and have a 480 point surplus. It's obviously specifically designed to be a vicious cycle of always having either too much or being just short.
Hm, I bet it's a conspiracy. Probably the hot dog people are involved...

Re:What a load of crap! (1)

mike260 (224212) | more than 6 years ago | (#21663263)

Agree. All the unspent leftover points are effectively an interest-free loan to Microsoft. I wonder how much it adds up to in total?
Plus they've got the crappy little skins and suchlike for you to spend your surplus points on, to try and discourage you actually accumulating your leftovers into a useful amount.

100 friends is harcoded client side (1)

badboy_tw2002 (524611) | more than 6 years ago | (#21661663)

I don't know why the number was set, but it will never change because every game would start crashing. Sorry!

Re:100 friends is harcoded client side (2, Funny)

j235 (734628) | more than 6 years ago | (#21662265)

"100 friends ought to be enough for anyone."

Could work around that though (1)

SuperKendall (25149) | more than 6 years ago | (#21663897)

They could allow you to have a larger friends list on Live, and allow you to define which of that larger set would be visible for any given day...

Thus allowing you to have different groups for different kinds of games you were currently interested in.

Or, they could have one user called "other" that they could proxy in messages from friends not in the "100" to you through.

Carnie System (4, Insightful)

SunnyDaze (1120055) | more than 6 years ago | (#21661715)

I believe the reason they do this is the same reason when you go to a carnival you have to buy tickets for a ride. So you never really know how much things cost. After all if it was just about making bulk payments easier then the price of things would match those bulk costs. Basically you'll always end up with change and figure you might as well buy so more so you can get rid of your leftover. All in all I hate the system.

Live and credit cards (4, Interesting)

king-manic (409855) | more than 6 years ago | (#21661719)

Live has the worst online transaction set up of all three. The PSN and Wii networks are 3 clicks to remove your CC. The live network is a 30 minute call followed by a 30 day delay to unhook your Credit Card from your xbox /360. They require passwords, emails used, gamer tag, you CC#, and it's expiry date. It's asinine. You may replace your card more easily but to actually remove one requires too many hoops to jump. Where as the PSN and Wii allow you to simply remove it form the account without needing to call, and it's removed instantly. They actually required me to speak with a call center manager to remove my card. After that I will not consider buying anything from the live network again. No membership, no games, nothing.

Re:Live and credit cards (1)

Skafian (671879) | more than 6 years ago | (#21663329)

I had a call trying to cancel my xbox live subscription in which one person asked me for all the information you mentioned. Then said he needed to forward me to an accounts person. who asked for the same information again. Who then said it would take 30 days.

This was a lot of information and if I didn't happen to have any one peice of the information (email address was a pain to remember which one I used), they wouldn't have deactivated.

It was absolutely the most frustrating thing I have had to deal with in order to cancel an account. I will never reactivate because of this.

Re:Live and credit cards (1)

TimFreeman (466789) | more than 6 years ago | (#21663503)

The live network is a 30 minute call followed by a 30 day delay to unhook your Credit Card from your xbox /360. They require passwords, emails used, gamer tag, you CC#, and it's expiry date.
I routinely use ShopSafe [bankofamerica.com] when transferring money to businesses I have no great reason to trust. It's great -- they can't take more money than I offer, and if I want to stop the payment I talk to my bank, not to the slimeball that made me want to stop the payment.

Re:Live and credit cards (1)

Guppy06 (410832) | more than 6 years ago | (#21663509)

This is a problem I've never had with either the Xbox 360 or the Wii: I buy prepaid points cards. No such personal information required to begin with.

I'm disappointed that I still can't do something similar with the PlayStation 3. Sony seems incapable of understanding that some of us are still paid in cash.

Re:Live and credit cards (1)

tgd (2822) | more than 6 years ago | (#21663525)

And you assume the quick procedures are doing anything more than hiding it from you?

Re:Live and credit cards (0)

Anonymous Coward | more than 6 years ago | (#21663695)

Given that the points cards and 12+1 month cards go on sale in retail stores, it's probably not the most efficent thing to have one's credit card senselessly floating around the aether anyway.

Interesting idea in comments at link (0)

Anonymous Coward | more than 6 years ago | (#21661761)

>>dithadder
"XBL customers are undoubtedly paying more by making thousands of interest-free microloans to Microsoft than they are saving by not paying "burdensome" transaction fees...."

This is an interesting theory. The question it has me asking is just how many unspent points is Microsoft holding on to?

Change in Microsoft's pocket (2, Insightful)

getnate (518090) | more than 6 years ago | (#21661857)

Say there are 2.5 millions users with 160 points left over ($2.00). That 5 million for Microsoft. Plus having some extra unspendable cash in someones account makes then more likely to add a few bucks to buy something else. Then they have change left over again, rinse, repeat.

Credit card (0)

Anonymous Coward | more than 6 years ago | (#21661869)

Wow, the first two replies were both idiotic.

You do know that credit card companies charge a minimum fee for each transaction, right? Microsoft can't let people do micropayments of $1 with a credit card because the credit card companies will turn around and charge Microsoft MORE than $1 to cover that transaction.

This is one of several reasons that I avoid buying any retail goods with a credit card. You pay the same price as you would pay in cash, but the credit card companies gouge the merchant for a chunk of the profits. I would rather see the merchant make that profit since they are the ones selling me the thing I want, so I pay cash.

Its also the same reason that most places have a minimum purchase amount of a few dollars, if you use a credit card. Otherwise it will cost them more to process the transaction than you actually paid for your purchase.

Re:Credit card (0)

Anonymous Coward | more than 6 years ago | (#21661903)

"Its also the same reason that most places have a minimum purchase amount of a few dollars, if you use a credit card."

I recall reading earlier today that is against their merchant agreement.

Re:Credit card (1)

Pluvius (734915) | more than 6 years ago | (#21662095)

The PlayStation Store has a number of items for sale at $1, and it doesn't use a stupid points system. This might be because Sony actually cares about customer satisfaction more than a tiny profit, or at least wants to appear to.

Rob

Re:Credit card (1)

edwdig (47888) | more than 6 years ago | (#21662413)

You do know that credit card companies charge a minimum fee for each transaction, right? Microsoft can't let people do micropayments of $1 with a credit card because the credit card companies will turn around and charge Microsoft MORE than $1 to cover that transaction.

The fees would be more like 30-40 cents. When I did a credit card processing system a few years ago, it was either .25 or .35 cents per transaction, plus ~2.5% of the transaction total. We also used Verisign's gateway, which meant naother 10 cents per transaction. I'm sure Microsoft created their own gateway and doesn't need the middleman providing that service.

Re:Credit card (1)

Bryansix (761547) | more than 6 years ago | (#21662523)

Actually merchant banks do not charge that much for transaction fees. They also let you choose a tradeoff between a set fee per transaction and a percentage of the transaction. So if you set your transaction charge at $1 the per charge percentage might be like .01% while setting it lower to $.25 per transaction would be like 2.5%. Nevermind that this is microsoft and they can do things to lower these expenses like 1) negotiate them lower, 2) run their own payment gateway, 3) open an entire merchant banking operations themselves which they could then sell to other businesses making a shitload a money in the process.

The most important thing here is not about them allowing you to buy points in micro increments. The major problem I have is that 100 points DOES NOT EQUAL $1. That is the stupidest shit ever. Explain that Microsoft! Sersiously, what were you thinking?!

It doesn't equal a dollar because (0)

Anonymous Coward | more than 6 years ago | (#21662837)

it would only equal a dollar in one goddamn market.
They charge different amounts for points in different markets, so that the prices in points of all items can remain the same across the system.

Re:It doesn't equal a dollar because (1)

Bryansix (761547) | more than 6 years ago | (#21663049)

Simple solution. Make Currency Points. The points would denote a currency on them. Then prices would be listed in the primary currency points of the user but if the user wanted to use another currency point they could be given that price. There, problem solved. It wasn't that hard, was it?

Re:Credit card (1)

Ash-Fox (726320) | more than 6 years ago | (#21662871)

The most important thing here is not about them allowing you to buy points in micro increments. The major problem I have is that 100 points DOES NOT EQUAL $1. That is the stupidest shit ever. Explain that Microsoft! Sersiously, what were you thinking?!
It is a trick to get you to buy more credits/points than you really need. By having credits/points you cannot use in your account, because you can never reach a zero balance without much difficulty, you have given them extra money. Now you know what they were thinking.

Re:Credit card (1)

G Fab (1142219) | more than 6 years ago | (#21663349)

Actually, I know that credit cards do NOT require a minimum fee per transactions.

And if you are responsible with debt, you should always use a credit card for major purchases. Not only is it easy to track and an additional proof of purchase, I have relied on credit card companies to protect me when a company has tried to screw me. I once had a defective purchase of over $1000, and when I complained, the store told me they just filed for bankruptcy and won't take my product back. One call to my credit card company and I got the product for free.

It's like a union of consumers.

Also, that think you are talking about with "a minimum purchase to use a credit card" is actually illegal breach of contract with all credit card agreements I'm aware of. It's a scam to make you spend more out of guilt. The business has contracted that they must treat credit card users same as cash users. Trust me, that business needs Visa a hell of a lot more than Visa needs that business. And if you see a business doesn't accept credit cards, it's a sign that the business is going to try to screw you.

Credit cards are not evil themselves. There are plenty of practices, such as raising credit limits for poor people to trap them in debt, or variable interest rates, that are evil, but there is no reason to avoid using a credit card if you are responsible with it. In fact, it's kinda stupid not to.

OK But (1)

MBCook (132727) | more than 6 years ago | (#21661917)

OK, I'll accept that. The Wii works the same way, after all. Now how about telling me why you can't peg points to the currency like Nintendo does with the Wii? Why is it that MS points are 80 for $1 [wikipedia.org] in the US? Why the weird exchange rate? Why can't it be 100:$1 like the Wii? Or at least something I can do math with easier, like 25:$1?

Re:OK But (1)

appleguru (1030562) | more than 6 years ago | (#21662429)

Mainly because they don't want you to have a good "real world" cost sense of what you're buying in hopes that you spend more.

Re:OK But (1)

dfn_deux (535506) | more than 6 years ago | (#21662469)

MS points aren't pegged to the US dollar because they don't cost the same in every market. I think the wikipedia page for live points gives a cost break down. I think it is stupid, but look at the cost of music through the zune store and it seems that at an equivalent of 98.5 cents per track that the savings of the bulk purchase is passed on vs the 99 cents it costs through itunes ;)

Re:OK But (1)

0xdeadbeef (28836) | more than 6 years ago | (#21662693)

Just do what I do: pretend the values are expressed in British Pounds. Then everything seems obscenely overpriced rather than just ridiculously expensive, so you never waste your money.

It also helps if you manage to get your balance down to a nice low 10 or 20. Then you'll avoid buying things just so you'll never again get trapped in that "oh no, I have points left over!" situation.

What a surprise. (1)

Medenus (1189293) | more than 6 years ago | (#21661943)

M$ lies again. Is anyone surprised anymore?

What I want to know (1)

Lost Engineer (459920) | more than 6 years ago | (#21661945)

is why there's no 1-to-1 correspondence with dollars or euros or fcking rupees for all I care. Beyond obscuring the cost, the exchange rate seems deliberately chosen to make things seem cheaper than they are.

That said, we're talking about a grand total of a few bucks here. I put more stock in the whining about paying for online access.

Full disclosure: I am a XBL subscriber and I want new rock band songs!

Re:What I want to know (1)

pxuongl (758399) | more than 6 years ago | (#21662987)

there are many reasons why a country wouldn't want float their currency, or to have peg their currency to another country's currency. you can read a brief on wikipedia:
http://en.wikipedia.org/wiki/Exchange_rate [wikipedia.org]

the US dollar, for example, used to be pegged to the real world value of 471.25 grains of troy silver... then to 23.2 grains of gold, etc etc... it's gone back and forth for various reasons over the years.

all in all, what's real is that the wealth of any country is different from that of it's neighbors and their peers. And the value of a country's money is, generally speaking, a reflection of the strength of their economy, the country's buying power, and that country's worth as it related to money relative to the rest of the world. And every country have very different economies and very different basis for their economies - be it tourism, farming, high tech, services, etc.

so in essence, why would the EU want the value of their euro to fall because india is doing badly? and why would india want to suddenly improverish half their middle class simple because Russia has a banner year?

Re:What I want to know (1)

Lost Engineer (459920) | more than 6 years ago | (#21663513)

Ummm I was talking about pegging XBL points to dollars (the subject of this discussion). But thanks for macro economics lecture.

The answer lies in the interest... (3, Insightful)

BobMcD (601576) | more than 6 years ago | (#21661997)

Every interest cycle that has them keeping more of your pennies means more interest in their pocket. And if you have enough of these copper babies, they add up, and so does their interest. Sure, they'll have to 'pay' out the content eventually, but meanwhile they are the ones collecting the interest, not you.

By the way, this is the same reason the Fed's are quite happy to help you over-estimate your income tax burden when you prepay.

It Should Be An Option... (2, Insightful)

SlashdotOgre (739181) | more than 6 years ago | (#21662057)

I hate it when stores use transaction fees as an excuse for not accepting credit cards (or creating artificial minimums). I can't tell you how many times I'd eat the fee and buy something, but walked away instead because that wasn't an option.

I'm fairly confident the real reason they don't allow small increments is the same reason they use points -- to obscure the real cost from the consumer. As an engineer I have virtually no background in physcology, but I can say from personal experience, it's easier to spend 1000 points than $5 (even when the value of points is much greater than the dollar amount). I'm also confident that designing the system so it's easy to end up with an odd amount of points that requires a bulk purchase to do anything again was intentional (eg. I have 200 Wii points right now and the cheapest purchase is 500).

Re:It Should Be An Option... (3, Interesting)

plague3106 (71849) | more than 6 years ago | (#21662245)

I hate it when stores use transaction fees as an excuse for not accepting credit cards (or creating artificial minimums). I can't tell you how many times I'd eat the fee and buy something, but walked away instead because that wasn't an option.

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

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

Re:It Should Be An Option... (1)

zippthorne (748122) | more than 6 years ago | (#21662459)

It's not that simple. The credit card organizations prohibit the stores from passing their transaction fee on to customers as a condition of having credit cards as an option. Brick & Mortar stores presumably price this into the regular prices for things, or just eat it as accepting credit cards increases the volume of the store.

The problem comes in with very cheap items that really don't make sense to price above the transaction fee. Would you, for instance, pay a couple of bucks on a piece of bubblegum?

If the store sells a few small items, they might still eat the cost, since customer goodwill is also valuable. The person who buys a keychain with a CC might be the same person that buys a HD-DVD player later, so you won't want to alienate them over the keychain. But if the store sells a lot of little things, a few at a time, they simply cannot afford to charge the prices that make sense for CCs, and as mentioned, they are FORBIDDEN from passing the transaction fee on to you. The store's only option is to not have CCs.

I'm pretty sure they're forbidden from having minimum purchases, too. If they accept credit cards at all, they're supposed to accept them for all purchases. The CC orgs want their fees to be transparent to the users. If you run into this situation, you might want to mention it to your credit card company.

Re:It Should Be An Option... (1)

Ash-Fox (726320) | more than 6 years ago | (#21662771)

It's not that simple. The credit card organizations prohibit the stores from passing their transaction fee on to customers as a condition of having credit cards as an option. Brick & Mortar stores presumably price this into the regular prices for things, or just eat it as accepting credit cards increases the volume of the store.
I think Microsoft should make a round number for a minimum of points, so you can at least buy two things EXACTLY with the minimum number of points you buy. This tactic is often used elsewhere in micro-payment services to always get a little extra money from the user who may not spend it. When it is difficult to get your points down to zero, they are always getting extra money.

I'm pretty sure they're forbidden from having minimum purchases, too. If they accept credit cards at all, they're supposed to accept them for all purchases.
Some local stores here say they only accept credit cards for 5GBP or more. I don't think it is forbidden.

Re:It Should Be An Option... (0)

Anonymous Coward | more than 6 years ago | (#21663129)

They can have a sign saying whatever they want. That sign would also most likely be in breach of their merchant agreement with the CC companies.

It's called breakage (4, Informative)

Evro (18923) | more than 6 years ago | (#21662123)

... getting people to pay for stuff they won't use. There are entire industries centered on exploiting this concept, most notably the prepaid calling card market. You pay for $20 and get $17 worth of product, and you can't use the remaining $3 for anything, so the company makes extra money on you. You see it everywhere... reward points on credit cards, etc.

http://en.wikipedia.org/wiki/Breakage_(accounting) [wikipedia.org]

Also hides regional price variance (1)

R4nneko (1194727) | more than 6 years ago | (#21662189)

Which is a nice little side benefit.

If I look at the US itunes store, I can immediately see that I am paying about 50% more for music compared to the US, as the standard track price in AU is $1.69

If I look at the cost of items on Xbox Live AU compared to the US (I believe that) the point costs are the same.

I know it works this way with the Wii, and the AU price conversion for cash -> Wii points is $1.50 -> 100 and the US one is of course $1USD -> 100, and the japanese one is 100JPY -> 100.

And of course the AU dollar hasn't been below 0.75USD since the Wii was released, and has typically been in the high 80s. And it certainly hasn't been below 90JPY since the Wii was released, but more people who ever see another countries store will see the same point cost, and think "Oh, they are paying the same prices"

Re:Also hides regional price variance (1)

G Fab (1142219) | more than 6 years ago | (#21663419)

That's a pretty neat little point.

I wonder why Microsoft cares to give the Dollar so much benefit. If Euros are worth more, they have no reason to devalue them.

I'm afraid MS is very US-centric. Sony is oddly doing much better outside of North America just as the dollar is not worth so much. I wonder if that's deliberate tactics on Sony's part to avoid this softer market. They do not hide values (but you have to have a credit card address in the market you're purchasing from if you buy a game from a different region). Is Microsoft winning the wrong battle?

Sadly Similiar in Nintendo's Case... (2, Informative)

morari (1080535) | more than 6 years ago | (#21662955)

While I love the Virtual Console, the bulk points system is broken. It's deliberately setup so that you always either have too few or too many points. For example, I bought 1,000 points. I grabbed the Opera Browser for 500 and then was going to get Super Mario Bros. - The Lost Levels with the other 500. It turns out that The Lost Levels cost 600, as opposed to the 500 that every other NES game does. This is probably due to it kinda-sorta being an import, but still ridiculous. So I think, "no problem, I'll just get 1,000 more points and then grab an N64 game as well". That was before I realized that Pokemon Snap is 1,000 points in itself. This puts me in an awkward spot. I have 500 points sitting around right now and would like to get The Lost Levels. To do so I need only 100 more points. I can only get a minimum of 1,000 at a time however, so I'd be left with 900 points at best. Unless I spend that on some crappy NeoGeo game, I'll be left with spare points forever! I'd much rather just buy the titles themselves, not bulk points that will hopefully even out in a purchase.

Re:Sadly Similiar in Nintendo's Case... (1)

G Fab (1142219) | more than 6 years ago | (#21663487)

You would not believe how much money the people who develop these stupid ideas to screw you make in a year. 25 years olds with MBAs sitting in rooms thinking of ways to tweak the margins for the benefit of the next quarter. In all reality, you are now a skeptical customer. In the long run, this stuff hurts the seller. But if some kid can boost profits 3% with one idea, he is going to do it even if it's going to come back and bite them in two years.

Just be ready for this to get worse as the world gets more and more digital, and transactions become convoluted as a result.

Re:Sadly Similiar in Nintendo's Case... (0)

Anonymous Coward | more than 6 years ago | (#21664029)

While I understand what you're getting at with your post, the Opera browser is, in fact, a free download.

Why I don't like Microsoft's gaming approach (1)

Luveno (575425) | more than 6 years ago | (#21663375)

As others mentioned, this is crap. The point is to get the dollar amount out of your head, much like the carnival ticket example mentioned elsewhere.

It's even worse than the Wii's point system because MS points don't map to easily divisible dollar amounts. I believe 800 points equals $10, which isn't difficult math but certainly isn't as easy as they could've made it. Contrast that to the Wii, where a point equals a penny, which the aforementioned 800 points would be a much more quickly to see $8. Sony does one better and just has you pay in actual currency.

The whole system is set up to deceive the consumer

This isn't Microsoft's only (IMHO) deceitful money grab on the xbox 360. If you want rechargable controllers, that's an extra $20, making them $70 compared to $50 for a Sony Sixaxis (the stock controller for the system). Want wireless Internet? Extra $90-$100. Want to play online? Extra $50 per year.

Granted, Live's service is currently superior to Sony's, but I don't know if it is $50/year superior. You can argue the 360 controller is better out-of-the-box because it has rumble, but I'm just talking about the stock hardware that is currently available - it's not like Sony is excluding rumble from some sticks and not others to do some price differentiation. And I left out the extra cost on the 360 if you are interested in high-def movies - it's fine they left it optional but I think the HDDVD add-on is overpriced as well.

My main point is that at some point it becomes disingenuous to claim Microsoft is providing better or even similar value to its primary competitor.

Disclaimer: I own a PS3, xbox360, and a Wii.

The hot dog problem. (5, Funny)

Kaenneth (82978) | more than 6 years ago | (#21663431)

Why do hot dogs come 10 to a pack, but the buns come 8 to a pack?

I always end up with leftover buns or dogs, forcing my to buy more, over and over!

It's a conspiracy!

http://www.straightdope.com/classics/a2_350.html [straightdope.com]
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