MS explains why you can't use exact change on XBL

by Justin McElroy { Dec 11th 2007 at 8:45AM }

We're going to be honest with you: We hate MS points. It's not because they're inconvenient, if anything, they're too convenient, and far too easy to spend. Whenever we get a mittful of them it's like when we go to another country where the money looks so dissimilar to our own that we just pretend all the bills are gift certificates. If we were paid in MS points, we would be broke in a week.

One of the other (perhaps more concrete) issues that some users have is being forced to buy more points than they need, something that so annoyed 1UP's Patrick Klepek that he went out and found out why: "The reason why we do that, the core reason, is around credit card transaction fees," said Microsoft's Aaron Greenberg. "If we do this in bulk, we don't have to burden the consumer with the transaction fees, or ourselves or publishers."

...OK, you win this round, Greenberg. Now, explain why points aren't worth a penny a piece, and we'll treat you to a (child's size) ice cream in a flavor of your choice.

Tags: aaron-greenberg, dlc, Microsoft, mspoints, points

Reader Comments (Page 1 of 2)

teeps1981 @ Dec 11th 2007 8:59AM

I can tell you why they aint worth a penny a point, easy peasy. Its because they would have to have different pricing structures for every single territory with a different currency. t the moment everyone pays pretty much the same price regardless.

JPN @ Dec 11th 2007 9:31AM

GRRRR...Joystiq ate my reply...hope it doesn't double post....

Anyway, your logic doesn't make sense. Either way, there has to be an exchange rate. Instead of paying 5000 pesos (as an example) for 800 MSP for a game, you should be able to pay 5000 pesos for a game. Adding another currency just ADDS an exchange rate.

It's all about economic psychology. They don't want you to know how much you're paying for that game. Everyone's grown up knowing how much the "value" of a dollar (in the US) is. When you have to decide if you want to pay $10 for a game, you start comparing it to other things - "I could buy 2 value meals for $10", "$10 is more than I pay for such-and-such", etc. Then there's the idea that a double-digit price registers as more than, say, a penny lower. ($9.99 is only a penny less than $10.00, but it registers differently with most people.)

Basically, they want you to not think about how much money you're spending. Especially with that goofy exchange rate. I can't even remember what MSP:USD is. At least with Wii points it's a 1:1 ratio. (I think?)

Kattleox @ Dec 11th 2007 9:40AM

I agree wholeheartedly with that last statement. Wii points are 1:1 and the PSN does it the best way yet: You put $5.00 in your wallet and that is worth $5.00 in money. Real money. In japan, everything is purchased in yen. In europe its euros, and so forth. THAT is the most effective way and it doesn't give the shaft to the owners. Imagine your reaction if you found that you had to buy WallMart points at the door and couldn't buy anything with real money. Would you go there? No.

B1gC72 @ Dec 11th 2007 10:00AM

yea you guys are spot on. im not really sure of the exact exchange rate form dollars to MS Points but i believe $5 is 400 points or something to that effect. anyway, they do that so you subconsciously think your spending less money since 400 is less than 500. now i would think after a matter of time, Live users would get used to the exchange rates and i wouldnt be a problem and surprisingly i dont think it is because i rarely hear them complain about it. i do know that Wii points are 1:1 for cents:points, and PSN is the least confusing with exact monetary values for your "Sony Wallet".

either way, Live users are buying contents like hotcakes over there so if you were expecting MS to change their stance, i wouldnt hold my breathe. they are making a shit load of money as is even though its just a tad shady in my eyes.

UnnDunn @ Dec 11th 2007 10:39AM

The idea of "virtual money" can also work for you, however. For example, while the "official" rate is 80MSP = $1, many times if you shop around, you can find 1600 MSP cards for $15 or so, and 4000 MSP cards for $43, which are less than the "official" rate. Simply because points cards are objects with no official cash value, so they can be discounted as long as the store meets its costs.

Mr Slavio @ Dec 11th 2007 11:30AM

@ JPN: "Instead of paying 5000 pesos (as an example) for 800 MSP for a game, you should be able to pay 5000 pesos for a game."

Uhm...1 US dollar is about 10 Mexican pesos. Your post gave me a good chuckle. $1000 for 1600 MS points? That's how off you were.

Draco @ Dec 11th 2007 2:47PM

3.5 Pesos is like 5 cents according to Micheal Moore on Sicko, granted he is biased, but it can't be that far off can it? I think you get like 30-40 pesos in a USD.

Mr Slavio @ Dec 11th 2007 3:45PM

In Sicko they were talking about the Cuban peso which is supposedly worth about a nickel. I suppose JPN could have even been talking about the Columbian peso which converts at 1 USD to 2000 COP. But I doubt a lot of Americans are even aware of these distinctions. Usually when someone says peso in America they're talking about Mexico.

Draco @ Dec 11th 2007 11:06PM

Thanks Mr. Slavio, I forgot they went to Cuba not Mexico. :)

baby sea tuna @ Dec 11th 2007 9:01AM

I'd still rather have leftover MS Spacebucks than Wii points, which are currently useless in denominations less than 500.

baby sea tuna @ Dec 11th 2007 9:02AM

+1, for use of the term "easy peasy."

def PD @ Dec 11th 2007 9:03AM

PSN lets you make purchases with exact denominations, I don't see why M$ can't as well.

dan stabbingworth @ Dec 11th 2007 9:10AM

Indeed. If a game costs this much, then charge me for exactly that amount. I don't really care if MS has to pay for transaction costs. Every other store that takes credit cards has to pay it, and they don't come up with shady schemes like this.

Besides, with the massive amount of transactions they make, I'm sure they can use their leverage to negotiate some sort of transaction fee that they would find tolerable.

Although, most likely, they would just start passing that on to the customers.

NATO_Duke @ Dec 11th 2007 10:40AM

Oh giggle giggle, there's the "M$" thing again. Go get 'em tiger.

They chose this plan like Nintendo chose theirs, and now you want to fanboy up the issue and make it like they're screwing people right? Anyone who has had a business can see the point in set amounts to dampen credit card fees, but hell, don't let logic bother your fanboy argument (aka blindness).

Cause God knows, if Sony does something to lose more money, everyone else should copy.

Crono (NDF - Knight of the Old School) @ Dec 11th 2007 10:55AM

MS is BSing the whole "pass the transaction fee to the consumer" thing. That is illegal. Remember in stores it used to be paying cash was cheaper than paying credit. Thats because all the stores passed the transaction fee to the consumer. The government put a stop to that, so now the salesman/store has to eat the transaction fees. Thats also why, for a long time, places wouldn't take credit for low dollar items, because the transaction fee would eat up all their profit.

So yeah, MS needs to eat the transaction fee, or get rid of points all together.

NATO_Duke @ Dec 11th 2007 10:59AM

Crono, MS does have to eat the fee, but that doesn't mean it is illegal for them to set blocks in their billing amounts, so as to minimize the amount of transactions. You are confusing the methods involved. They are doing it as a cost saving measure, and they are allowed to.

Also, walk around town and see - many businesses will not take a credit card for under a set amount they decide.

Crono (NDF - Knight of the Old School) @ Dec 11th 2007 12:34PM

Thats not what I was calling illegal. I said it was illegal to pass the transaction fee along to the consumer: IE having one price for cash, and a more expensive price for credit.

NATO_Duke @ Dec 11th 2007 1:23PM

You lost me there. You said earlier "MS is BSing the whole "pass the transaction fee to the consumer" thing. That is illegal." There is what you said was illegal.

Now you are saying that a seperate price for cash and credit is what you meant - I don't recall them ever trying to do that or that being an issue.

So exactly what are they doing that is so wrong or illegal?

(Sorry dude, but if you are going to change your story as to make me look like I don't get it, you can expect me to point that out.)

Crono (NDF - Knight of the Old School) @ Dec 11th 2007 1:59PM

What do you think "Passing the transaction fee to the consumer" would result in, Nato? Turn your cognitive reasoning back on.

The way things work now: You pay the same price cash or credit. MS eats the 25 cent or whatever transaction fee. Now if MS "passed the transaction fee to the consumer", you would pay an extra 25 cents over cash if you paid credit. That is illegal, or at least against Visa and Mastercard terms of service.

Do you comprende now?

Crono (NDF - Knight of the Old School) @ Dec 11th 2007 2:04PM

I think I see where the confusion is coming from. MS doesn't currently pass this fee to the consumer, as dan stabbingworth suggests they would. All I was saying is that they CAN'T pass the fee to the consumer, and thus it is a BS excuse that Aaron Greenburg makes when he says "If we do this in bulk, we don't have to burden the consumer with the transaction fees, or ourselves or publishers."

They can't burden the consumer with the transaction fees. They may not even be able to burden the publishers with it, since XBOX live is the retailer, and the retailer pays all point of sale fees associated with that sale.

I'm calling BS on Greenburg's excuses.

NATO_Duke @ Dec 11th 2007 3:26PM

Thanks for the "Do you comprende now" bit. I think I have handled enough legal matters as an attorney to be able to reason the legality of this. There is nothing involved that is improper or illegal no matter how one spins it.

Crono (NDF - Knight of the Old School) @ Dec 11th 2007 3:30PM

Jebus nato, will you freaking read what is written. I never said what they do now is illegal, just that they can't pass the fees on to the consumer. Thats all I said, thats all I've ever said.

Damn.

NATO_Duke @ Dec 11th 2007 3:34PM

Oh c'mon now...this is all in fun. I know what you are asserting as illegal. I am just saying that they aren't doing anything that would come close, no matter how poorly the folks phrase it.

The real point is simply - if their costs were high because of having to pay more fees, common sense says they will raise their prices as it's their choice to have higher rates.

...and the name is Duke.

Synner @ Dec 11th 2007 4:38PM

@Crono,
Ths store having to eat the transaction fee is bullshit. Why should the guy trying to make a living have to cover the cost of you being too lazy to go get cash or write a check? I love how people in this country think it's awesome when the government "sticks it to the man"

@ Duke
They used to charge 6% higher for using cards in some stores. Gas pumps also had a cash price and a credit price on them. If you are old enough to have made it through law school, you'd be old enough to remember this too.

Crono (NDF - Knight of the Old School) @ Dec 11th 2007 4:57PM

No Synner, its not bullshit, its the price of being able to take plastic instead of just cash. Its a feature in your store that you have to pay for in hopes that more customers will visit you because of its more convenient payment options.

What would be bullshit is if I get charged 2-5 percent more because I'm using my credit card, instead of going to an ATM for the cold hard cash (and which also might cost me an extra 2-4 dollars, depending on ATM and Bank fees).

I normally agree with you on most of the topics we discuss here, but its not unreasonable to expect even small business to eat the transaction fee.

Ever sell anything on ebay, and get paid through paypal? Paypal takes a small transaction fee. Has it ever broken your bank? No. Its just one of the many costs of doing business.

Nato... err I mean Duke: yeah, uh, sorry for screwing up your name.

Synner @ Dec 11th 2007 5:42PM

The part I don't like is that the GOVERNMENT makes the small business pay the fee. I'm fine if they decide to pay it on their own. But the fact is when banks wanted to charge for using ATMs so many years ago, people went ape shit, but they are ok with the CC fees as long as someone else has to pay them. And do you ever use an ATM that charges you? Do you think it is worth payign %10 to get your money out? Mcdonalds didn't take credit cards for the longest time and it didn't hurt their sales much.

I think the Transaction fees are crap since the companies are making killing off the interest already, if stores said FU and your fees Visa, I'm making my own Credit plan, those fees would go away real quick.

I just hate the Gov't stepping in and telling people how to run their businesses. Probably because my family had a small business all my life and when they have nothing to lose when you fail, they should keep the fuck out of telling you how to run it.

NATO_Duke @ Dec 11th 2007 5:44PM

Oh c'mon Synner - how long ago was that? I am thinking the 80's when we had that pricing. I also believe it was called a "cash discount" in which cash users got a lower price than credit card users. Really, it was not a charge for using credit cards as much as a perk for not using them. Yeah, I am old enough to remember.

Crono - I was just ribbing you on the name.

Synner @ Dec 11th 2007 5:51PM

You know it occured to me that after I posted coming off like a big asshole they might have been called different things, I know around pittsburgh it was labeled Credit Card Surcharge though, not cash discount.

NATO_Duke @ Dec 11th 2007 5:54PM

Yeah, in Cali they were called a cash discount - but I guess they could have different names for it all over. I heard some places were trying to do the cash discount sales again recently.

NekoMode @ Dec 12th 2007 2:47AM

Dude I run a small business and as an owner I have the right to make demands if someone wants to swipe their card in my store. I mean with such a small margin on many of my products that 35-40 cent transaction fee adds up especially if they are buying $1-2 items one at a time when on average I might make 20-50 cents on each. That transaction fee eats almost my whole profit margin on small products if not more than my profit margin.

I don't HAVE to eat that fee and I see where Microsoft is coming from. That is the exact same reason why I implement a $25 minimum purchase to use a card at my store and why I have to bump prices up online when my payment gateway takes 3% of everything I make.

Ihar `Philips` Filipau @ Dec 11th 2007 9:10AM

> [...] explain why points aren't worth a penny a piece [...]

Because all currencies undergo an inflation and all many other factors which influence real value.

Obviously M$ wanted to distance itself from all the problems.

Just check USD - http://finance.yahoo.com/currency/convert?from=USD&to=EUR&amt=1&t=5y

Points are not real money and M$ can set all the rules. No free market goodies for you.

AirIntake @ Dec 11th 2007 9:32AM

You can buy point cards in stores for less than they sell online, so the free market is quite alive. PS - Using a $ in MS makes you look like a retard. You must get over the fact that all corporations exist to make money.

Crono (NDF - Knight of the Old School) @ Dec 11th 2007 10:56AM

Except that dispite the falling dollar: its still 80 points to a dollar. Its not 50 points to a dollar now that inflation is taking over. The exchange rate hasn't changed.

Brandon @ Dec 11th 2007 9:11AM

This is one thing that Sony did right with the PSN. There is no illusion as to how much things cost, and you can put exactly what you need to buy something with into the wallet. If I want to buy a 4.99 game, I only have to spend 4.99, I dont have to buy some arbitrary amount of points that would leave them with my change.

redd @ Dec 11th 2007 9:17AM

Actually, Brandon, you would have to spend $5.00 and have a penny left in your wallet.

def PD @ Dec 11th 2007 9:27AM

@redd:

True, but on your next purchase instead of adding another $5 for your next purchase, you can add $4.98 (for a $4.99 purchase) and use that leftover penny so you'll have no odd change leftover.

Regardless, with the PSN you'll always have leftover change due to the 99 cent pricing scheme, but at least Sony gives you the option of purchasing your next item with the exact amount.

timnc @ Dec 11th 2007 9:28AM

Unfortunately it's the ONLY thing PSN does right. Otherwise it is quite possibly the worst site geared to make you spend money I have ever seen. It actualy makes me feel ashamed for Sony every time I use it. They needs to steal from the MS/Nintendo playbook and make it part of the UI.

KingOfGods @ Dec 11th 2007 9:28AM

well because of tax its not exactly 4.99. You will have to add 10.00 to your wallet to cover.

and as for cc transaction fees in retail stores...have you ever been to a store and see signs that a minimum cc transaction is $10, that's because anything less than that and the fee charged to the retail outlet eats too much into profits.

redd @ Dec 11th 2007 9:41AM

@def PD:

I thought the minimum amount to add to your wallet was $5.00? So, if you have .01 in the wallet and want to buy a 4.99 item, you still have to add $5.00 and will have .02 left over.

B1gC72 @ Dec 11th 2007 10:09AM

yea red is right. i have like $.03 in my Wallet now from buying 3 games. i just use the penny to count how many things ive downloaded and its not like the penny is going anywhere, if you buy enough stuff you can use it.

and i also agree with timnc to an extent. the store certainly needs to be part of the UI but i think the Wii one is web based just like the PS3s (they seem to load about the same way for me). i have no idea about the Live Marketplace though i cant comment on that.

Trev @ Dec 11th 2007 10:20AM

Actually (and I just checked the online wallet to be sure) anything over $5 is now charged per-penny if you don't have enough spare cash in your wallet. Leave the spare pennies there and any time you buy something over $5, just don't add money before hand. It will charge your credit card the difference of the price and your leftover change and leave you with a nice, clean wallet.

gk128 @ Dec 11th 2007 10:37AM

There is a way you can actually use exact change. If your wallet is empty or under funded just check out. It'll tell you you need to add funds, and then give you the option of using the exact amount needed without buying a pre-set amount.

why not the LS2LS7? @ Dec 11th 2007 12:17PM

Yep. PSN offers to add exact change, it's just there's a $5 min per transaction. For add-on DLC that means you might have cash in your wallet left over.

Matt B @ Dec 11th 2007 9:21AM

He totally evades the true answer. It's just like iTunes cards. You get $15 cards but the songs are $.99 which leads to $.15 left over just hanging out doing nothing but earning apple interest. Just like points, there is always a small bit of change left over and multiply that few cents times a few million starts to build up a nice intrest collecting account for MS.

Frank @ Dec 11th 2007 10:19AM

Wow wow wow. Not at all. How does you having extra points on your account = money they gain interest on? You bought the points, MS already got your money. You loading points onto your account doesn't mean you're handing them back your money until you want to use it.

Matt B @ Dec 11th 2007 10:23AM

...and the unused points sit and gain interest.

JPN @ Dec 11th 2007 9:35AM

The answer also doesn't make sense in that, either way, there's a credit card transaction...MSP are just an arbitrary way to measure that transaction between us and MS. But why not represent that in dollars and cents? They wouldn't have to "run" the transaction in dollars and cents any more than they'd ahve to "run" it for MSP.

The more I think about it, the more it's gotta be a total lie. Whether I pay MS for 500 MSP for $10 or whatever, or I pay them $100 for 5000 MSP, there's still a credit card transaction charge. Where does the bulk come in? Total spin...I can't believe people fall for it...of course I'll still be buying MSP, lol...