There are signs that Microsoft might be phasing out its points system, and we should all welcome that development—because console currency is a rip-off.
Microsoft is prepping its new operating system, Windows 8, for a debut this month. The understanding used to be that Windows 8 would rely on Microsoft points, just like the Xbox 360 does. But now it seems that cash will be the default payment option. Further, the option to pay with cash briefly surfaced on Xbox LIVE, apparently because of a programming accident. Rumor has it that Microsoft Points could be phased out completely—and good riddance.
To be fair, there is a legitimate reason that companies might want to use points instead of cash. Credit card companies charge an "interchange fee" for each transaction, so it's better for Microsoft if you buy $20 worth of points all at once, rather than spending $10 one week, $5 the next, and $5 the one after that.
But that's not the only reason you're stuck with points. After all, Steam manages to work just fine, even though it offers plenty of games for cheap and charges credit cards with each purchase. And if they wanted to, the console makers could bill users once a month so they could run multiple transactions at once, rather than making us pay in advance. There's something deeper—and in my view, more sinister—going on here. Simply put, console makers are forcing their customers to give them interest-free loans, and using cheap psychological tricks to get us to spend more money to boot.
Typically, when one person gives money to another and gets nothing in return except the promise of repayment later, we call it a "loan," and the lender gets to charge interest. If you buy a $20 Microsoft card, you're certainly giving them your money for no immediate payment—you don't get your $20 worth of merchandise until you spend the money on the card. In the meantime, Microsoft is earning interest on your money, and it's certainly not passing any interest on to you. That doesn't amount to much money in any one case, but console makers are probably making a decent sum when you add all of our unspent points together.
The point system also uses some classic sales gimmicks to get you to spend more money. Once your money is no longer your money—but instead has been converted to another currency, and is sitting in a special account until you use it—you feel pressure to spend it before you forget about it. Ever notice how you're willing to make a special trip to get rid of a gift card? It's the same principle here.
And easily the cheapest move can be credited to Microsoft, which is why I'm especially glad that its point system might be ending. Whereas every Nintendo point is worth a cent, and PSN cards are denominated in regular currency, every Microsoft point is worth a cent and a quarter. A cent and a quarter, for crying out loud.
So, while a game marked "800 Microsoft Points" might make your brain tell you "$8.00," it will really set you back $10. It's a lot like pricing something $9.99 instead of $10: It looks a little less than it really is, and tricks us into spending more. This has been a ridiculously obnoxious move since the dawn of Microsoft Points—who wants to do math in their head every time they see a price tag?—and we should all be glad to see it go.
On today's marketplace, credit cards are ubiquitous, and countless businesses—from Steam to Starbucks—gladly let you swipe your plastic even when your purchase is small. It's awfully hard to believe that credit card fees are what's motivating Microsoft to channel their online game purchases through a special point system. I suspect they're mainly just trying to claw extra money out of us.
Hopefully, the rumors are true, and Microsoft is getting rid of its point system. Hopefully, under the new system, the company will stop making users pre-pay for content. And hopefully, the other console giants will follow. It's 2012—and it's about time we pay for game downloads the same way we pay for everything else, one purchase at a time.
Date: October 16, 2012
*The views expressed within this article are solely the opinion of the author and do not express the views held by Cheat Code Central.*