What are the advantages/disadvantages of points vs dollars

[draconian]

You can probably guess where I got the idea for this thread. But seriously, what are the pros and cons of each?

Nintendo and Microsoft use points while Sony uses actual dollars/cents. Some had said for tax reasons, points are better.

[AntShaw]

You can't get any discount on $$. But you can always find discounts on points. At least in the States you don't have to pay tax as well.

[ShadowRunner]

I dont think dollars really have any positives or negatives, they are what they are. Points: from a consumers perspective the negatives are that its not obvious what you are actually spending so its harder to know wether content is good value to you or not, the positives are that you can buy points for less than RRP so can make savings over others who pay full price, though a cynic may say this percieved saving is actually artificial and those that dont seek out cheep points are paying more than they should rather than you paying less than you should. Overall it doesnt really make a scrap of difference IMO as long as you are able to grasp simple math and make your purchasing decisions based on that.

[draconian]

You can't get any discount on $$. But you can always find discounts on points.

Why can't you get discount on dollars, but only with points?

If you buy a 400 point card for less than the normal msrp, than when you make an actual purchase, the person who loses out is Microsoft. The dlc provider still gets his fair share 30% or whatever it is.

I would imagine the same thing could happen with psn. Users could buy a $20 psn card for $18. User then buys dlc and the dlc provider probably still get's their fair share and sony eats it.


At least in the States you don't have to pay tax as well.

I don't have an xbox, but I do have a psp. I've added funds via my credit card and have bought games. I was never charged tax on any of my purchases.

Now, if one buys psn card, isn't that purchase considered a gift card and thus one shouldn't be taxed. So, there are no taxes on psn either it seems.

One advantage of points is that you could charge uniformly across territories. Call of duty map pack would be like 1200 points whether your in Japan, America, or Europe.

There are probably also some legal rules that make using points easier for the platform holder.

[N_B]

Charging uniformly across territories is definitely an advantage* for points. Publishers on PSN can seem to charge whatever they damn well please for different regions with the same content. I know there have been complaints about Dragon Age Origins: Awakening recently, snd Sony even advised them to lower the price.

And there's no trying to get a better deal on different stores either because DLC is region locked.

*For the consumer, at least :|

[RobertR1]

I like points. I always get them for discounts. I don't care the point, I care about the value in it for me.

Another factor is likely psychological. People might attribute points with fun and are more inclined to spend "points" vs money.

[patsu]

With $$$$, you get discounts on the games directly.

With points, you can buy points at a discount (i.e., park your money with the vendor for them to make collective interests), and then you have another opportunity for game discount.

Point discount or $$$ discount are neutral value-wise. It depends on whether the vendors want to give you a smaller/bigger discount.

Also $$$ transaction does not preinclude a point system. I am sure you have encountered loyalty point systems in retail stores elsewhere.

[specwarGP2]

You can't get any discount on $$. But you can always find discounts on points. At least in the States you don't have to pay tax as well.

I'm inclined to think that if you can always find discounts on points, the price is inflated to begin with.

[eastmen]

With $$$$, you get discounts on the games directly.

With points, you can buy points at a discount (i.e., park your money with the vendor for them to make collective interests), and then you have another opportunity for game discount.

Point discount or $$$ discount are neutral value-wise. It depends on whether the vendors want to give you a smaller/bigger discount.

Also $$$ transaction does not preinclude a point system. I am sure you have encountered loyalty point systems in retail stores elsewhere.

You can not only get points at a discount but sometimes content is also discounted.

So you can actually make out really well.

The one nice thing about MS points is its universal , it works on xbox live , windows live and my zune. I hear they will also use it on win 7 phone.

[RobertR1]

I'm inclined to think that if you can always find discounts on points, the price is inflated to begin with.

If the price of a game is the same on both systems, but one can be purchased via the points equivalent that can be found at a discount while the other requires direct cash payment, are the points still inflated? or is the price of the game inflated?

[zed]

points on consoles are I assume exactly the same as with other points schemes
they benefit the point giver in 2 ways

A/ money up front, i.e. u buy $100 worth of points but u dont use all those $100 worth of points instantly
B/ a certain percentage are never used, Ive read something like ~20% of points are never actually used

[Shifty Geezer]

Charging uniformly across territories is definitely an advantage* for points. Publishers on PSN can seem to charge whatever they damn well please for different regions with the same content. I know there have been complaints about Dragon Age Origins: Awakening recently, snd Sony even advised them to lower the price.That's not intrinsic to points. There's a money-to-points ratio for each currency, meaning different regions will pay different amounts. With cash, an exchange rate could be fixed at the same rate as you would points. eg. In a 'fair' system, all customer pay the same. For points, you'd price the points at a local pricepoint relative to international currency value. Let's say $1 = 100 points. European customers could be billed €0.75 for 100 points, and Latvistonians Drogba's, it could be D1500 for 100 points. Buying 100 point item would cost the same relative dollar amount for everyone. In cash, you could bill the US customers $1, EU customers 75 cents, and Latvistonians 1500 Drogba. Cash or point makes no difference.

Likewise you can have regional price difference. For cash, just charge different amounts - $1, 75 eurocents, or only 150 Drogba. The Latvistonians get it for one tenth the price! Or with points, charge $1 for 100 ponits, 75 eurocents for 100 points, and 150 Drogba for 100 point. That 100 point game is 100 points everywhere, but the regional price difference is still there.

The difference with Sony's system I think is that they allow the publishers to set their price with no hard limits, allowing for regional price differences. And these regional price differences are part of commerce due to selling to local economies. They exist everywhere else (CE goods, services, etc.) so why shouldn't they with content? Not that I'm saying they should or not, only that there are regional price difference due to regional economies.

And there's no trying to get a better deal on different stores either because DLC is region locked. That's not an issue of cash versus points! ;)

With $$$$, you get discounts on the games directly. What's to stop someone discounting game prices in points? "Buy Zombie Massacre. Was 500 points, now 300 points!"

With points, you can buy points at a discount (i.e., park your money with the vendor for them to make collective interests), and then you have another opportunity for game discount.
You can buy cash cards at a discount too. I've seen £50 PSN cards for £46. Points are just more sensible for discounted cards, because it sounds a bit crazy to get money for less money!

Overall I think there's virtually no difference in what the systems offer. At the end of the day points are just another currency, and buying points is like buying foreign money's to go shopping abroad. There are no intrinsic limits to the services you have to provide with either system. Excepting maybe certain legal issues with dealing with money, which I don't know anything about. But for the end users, the possibilities of discounts, bonuses, and regional price variations are a factor of the service providers and publishers, and not at all tied to the payment method.

[Rolf N]

The one nice thing about MS points is its universal , it works on xbox live , windows live and my zune. I hear they will also use it on win 7 phone.Money works in more than 4 places. Like, a lot more.

[Billy Idol]

It is obvious:

Dollars is good for the consumer...points good for MS!

Points would be as good as dollars, if I could buy as much as I want...but I am forced to buy for instance 1000 points, but I only need 800 points...so I have 200 left. With this 200 I cannot buy anything - great/phantastic/sensational, except, of course, if I re-stack them up to buy something else....this is what I call a vicious circle!

[Florin]

Money works in more than 4 places. Like, a lot more.

http://i273.photobucket.com/albums/jj223/AnnePlomp/smileys/th_schater.gif

[liolio]

It is obvious:

Dollars is good for the consumer...points good for MS!

Points would be as good as dollars, if I could buy as much as I want...but I am forced to buy for instance 1000 points, but I only need 800 points...so I have 200 left. With this 200 I cannot buy anything - great/phantastic/sensational, except, of course, if I re-stack them up to buy something else....this is what I call a vicious circle!
You're pretty much spot on ;)

[Rangers]

Didn't MS just now allow 400/800 point purchases via this last update? I read that on "another forum".

Sounds like a step in the right direction I guess.

[liolio]

Didn't MS just now allow 400/800 point purchases via this last update? I read that on "another forum".

Sounds like a step in the right direction I guess.
I read it too, I guess I'll ewperience soon as I bought 2000 points and spent 800 on GW2 (missed the promo... :evil: ) so I'm not left with enough points for other games I had on my radar, 400points may fit the need :)

[Shifty Geezer]

Points would be as good as dollars, if I could buy as much as I want...but I am forced to buy for instance 1000 points, but I only need 800 points...so I have 200 left. With this 200 I cannot buy anything - great/phantastic/sensational, except, of course, if I re-stack them up to buy something else....this is what I call a vicious circle!Sony has a minimum £5 payment to PSN, meaning money sitting in the bank you can't spend. Again, this isn't a matter of points versus cash, but how the systems are implemented. There's nothing to stop MS allowing direct point purchases as needed if they wanted, or Sony fixing PSN crediting to payments in multiples of $10.

[patsu]

You can not only get points at a discount but sometimes content is also discounted.

So you can actually make out really well.


That's what I said above. ^_^
Still, it depends on the quantum of the total discount to know whether you have the better deal; and whether you can invest your deposited money somewhere else for yourself.


The one nice thing about MS points is its universal , it works on xbox live , windows live and my zune. I hear they will also use it on win 7 phone.

That's the idea. Generate a point economy to encourage consumers to spend money with them (because the $$$ have already been converted to points).

If the price of a game is the same on both systems, but one can be purchased via the points equivalent that can be found at a discount while the other requires direct cash payment, are the points still inflated? or is the price of the game inflated?

That's because in your example, you have already precluded game discounts on PSN. They have seasonal promos. Wait for the game discount (50% off).


What's to stop someone discounting game prices in points? "Buy Zombie Massacre. Was 500 points, now 300 points!"


That's why I said: "With points, you can buy points at a discount (i.e., park your money with the vendor for them to make collective interests), and then you have another opportunity for game discount."


You can buy cash cards at a discount too. I've seen £50 PSN cards for £46. Points are just more sensible for discounted cards, because it sounds a bit crazy to get money for less money!

Overall I think there's virtually no difference in what the systems offer. At the end of the day points are just another currency, and buying points is like buying foreign money's to go shopping abroad. There are no intrinsic limits to the services you have to provide with either system. Excepting maybe certain legal issues with dealing with money, which I don't know anything about. But for the end users, the possibilities of discounts, bonuses, and regional price variations are a factor of the service providers and publishers, and not at all tied to the payment method.

Yes, the point system is designed with the idea of fostering a proprietary-currency. The currency owner can benefit from various ways. From the consumers' perspective, if you spend your money wisely, then it should boils down to how aggressive the vendors want to sell their goods (e.g. aggressive discount).

[eastmen]

Money works in more than 4 places. Like, a lot more.

If i buy a $$$ card for psn last I checked i only worked in one place. The PSN store.



That's what I said above. ^_^
Still, it depends on the quantum of the total discount to know whether you have the better deal; and whether you can invest your deposited money somewhere else for yourself.

From what I can tell games are priced the same on xbox as they are on psn. So if I get the points at a discount. Sometimes I can get 4000 points for $38 bucks if i shop around. That equates into $50 of xbox live content or $50 psn content. So I'm already saving $12 bucks. If they do a sale on the content it even better.


That's the idea. Generate a point economy to encourage consumers to spend money with them (because the $$$ have already been converted to points).


True , the other benfit for the consumer is never having to hand over your credit card information.

[Shifty Geezer]

If i buy a $$$ card for psn last I checked i only worked in one place. The PSN store.That's changing, and eventually content bought on PSN will work on PCs and TVs too. But you're right, once you commit any amount of money to these services, it's lost to them. You can't get it back. So giving MS $10 you can use in four places you want to is a little versatile than giving Sony $10 you can only spend on content for PS3 and PSP, specifically the PC space. I'd hardly call it universal though!

[patsu]

From what I can tell games are priced the same on xbox as they are on psn. So if I get the points at a discount. Sometimes I can get 4000 points for $38 bucks if i shop around. That equates into $50 of xbox live content or $50 psn content. So I'm already saving $12 bucks. If they do a sale on the content it even better.


Sure ! But you are obliged to spend $38 bucks now. If you want to give your money away ahead of time, you can buy pre-paid cards at a discount too. Phone cards do that very often. I think Shifty gave a PSN Card example above. If the vendor wants to, they can implement a loyalty point system on top of the $$$ transaction (e.g., mileage points).

As for games are priced the same on XBL and PSN. Of course ! But there are PSN promo periods, just like there are opportunities for you to buy discounted points and games. If you're not interested in the discounts or purchase, you will miss them.


True , the other benfit for the consumer is never having to hand over your credit card information.

You don't have to use credit card. ^_^
Prepaid PSN cards exist. Both XBL and PSN probably profile your purchase habits to great details.

EDIT: Speaking of discounts, PSN recently experimented with digital pre-orders. If you're willing to part with your cash ahead of time, you get better price for the participating game(s). On these digital networks, you should also be able to find "Promo Codes" for free items that are associated with your purchase (e.g., Qore).

[draconian]

pros for points from a platform holder perspective
-points seem "fun" and easier to spend.
-ms redenominates to a lesser numerical value. 80 ms points are psychological easier to spend then $10 psn.
-uniform pricing across territories. easier to manage and advertise dlc content?

pros for dollars from a platform holder perspective
-none

Those are the really only differences.

After looking into it, both MS and Sony don't give refunds. In fact Sony is worse in this respect because after 24 months, your psn dollars expires - I bet no one knew that! The only MS points that expire are ones received via promotions/contests.

[Rolf N]

If i buy a $$$ card for psn last I checked i only worked in one place. The PSN store.So both are the same in this respect, right? Money dropped into the system can only be spent within, but not be pulled out again.

[patsu]

pros for points from a platform holder perspective
-points seem "fun" and easier to spend.
-ms redenominates to a lesser numerical value. 80 ms points are psychological easier to spend then $10 psn.
-uniform pricing across territories. easier to manage and advertise dlc content?

pros for dollars from a platform holder perspective
-none

Those are the really only differences



Ha ha, it depends on what you want to achieve. The point system can be a business in itself. The main strength for a closed currency would be to pool the customers' money together into a controlled economy (so that you can lock them in and make money). It requires more effort to put in place and operate though. However, you can boast about the amount of money amassed in this point pool.

They can't refund you points because you can make money from them using the discounted points. ^_^

And those are most certainly not the only differences (from platform holders' perspectives).


After looking into it, both MS and Sony don't give refunds. In fact Sony is worse in this respect because after 24 months, your psn dollars expires - I bet no one knew that! The only MS points that expire are ones received via promotions/contests.

Ah, you mean the PSN card expires or your $$$ disappear from PSN wallet after 2 years ?
I know iTunes Gift Cards expire in 2 years if you don't use them.

[draconian]

Ha ha, it depends on what you want to achieve. The point system can be a business in itself. The main strength for a closed currency would be to pool the customers' money together into a controlled economy (so that you can lock them in and make money). It requires more effort to put in place and operate though. However, you can boast about the amount of money amassed in this point pool.

They can't refund you points because you can make money from them using the discounted points. ^_^

And those are most certainly not the only differences (from platform holders' perspectives).


I think the psn store is also a closed currency. Someone needs to research this, but psn dollars I think are also non-refundable. Thus, in essence psn dollars are a currency in itself.


Ah, you mean the PSN card expires or your $$$ disappear from PSN wallet after 2 years ?
I know iTunes Gift Cards expire in 2 years if you don't use them.
From what I read - take with grain of salt - your $$$ actually disappear from the psn wallet.

[patsu]

I think the psn store is also a closed currency. Someone needs to research this, but psn dollars I think are also non-refundable. Thus, in essence psn dollars are a currency in itself.


Ha ha, PSN uses real currency and that's it ! If you're referring to the pre-paid card refunds, then check with the stores you bought them from.


From what I read - take with grain of salt - your $$$ actually disappear from the psn wallet.

Link in the article ! It sounds more like a bug, a mishap or PEBCAK.

[draconian]

Ha ha, PSN uses real currency and that's it ! If you're referring to the pre-paid card refunds, then check with the stores you bought them from.



Link in the article ! It sounds more like a bug, a mishap or PEBCAK.

Well, I did some research. terms of service in UK (http://uk.playstation.com/legal/detail/item238015/PlayStation%C2%AENetwork-TERMS-OF-SERVICE-AND-USER-AGREEMENT/)

Wallet funds have no value outside PSN and are not redeemable for cash. Wallet funds can only be used to access content or services from us. PSN wallet funds are not your personal property and cannot be transferred to any other person. Please understand that the PSN wallet is not a bank account and we are not operating as a bank. You will not be entitled to a refund for any unused funds, except where expressly provided by these Conditions or by applicable law.


This whole time it's been that psn wallet funds are sony's point system.

[eastmen]

Sure ! But you are obliged to spend $38 bucks now. If you want to give your money away ahead of time, you can buy pre-paid cards at a discount too. Phone cards do that very often. I think Shifty gave a PSN Card example above. If the vendor wants to, they can implement a loyalty point system on top of the $$$ transaction (e.g., mileage points).

As for games are priced the same on XBL and PSN. Of course ! But there are PSN promo periods, just like there are opportunities for you to buy discounted points and games. If you're not interested in the discounts or purchase, you will miss them.
Well I can make a bunch of little charges on my credit card I guess. Sony doesn't care if i make a $3 credit card charge for content ?


You don't have to use credit card. ^_^
Prepaid PSN cards exist. Both XBL and PSN probably profile your purchase habits to great details.

Yes but PSN cards come in fixed amounts. Which means just like xbox live I will have my money in the system.


EDIT: Speaking of discounts, PSN recently experimented with digital pre-orders. If you're willing to part with your cash ahead of time, you get better price for the participating game(s). On these digital networks, you should also be able to find "Promo Codes" for free items that are associated with your purchase (e.g., Qore).

Yes Valve should welcome sony to 2002.


So both are the same in this respect, right? Money dropped into the system can only be spent within, but not be pulled out again.

Yea.

But with MS points can be used on the 360 , zune and upcoming windows 7. Money locked into Sony can be used only on PSN which is games for the ps3 and games for the psp go I believe.

[Rolf N]

Yea.

But with MS points can be used on the 360 , zune and upcoming windows 7. Money locked into Sony can be used only on PSN which is games for the ps3 and games for the psp go I believe.If you see it that way, PSN wallet dollars are a fantasy currency like MS points are, as they cease to be actual real-world dollars the instant you transfer them. I find that a little cynical though, as in most cases you can pay for content directly from your credit card, with the exact amount. The intermediate conversion to wallet money is transparent and lasts only for a few seconds.

The "evil" part is lingering "partial" money that you'll feel compelled to tack onto another purchase. Because you can't charge your cc with less than 5$ I believe, you'll run into that on PSN, too, just not as systemically as with the existing points systems.

[patsu]

This whole time it's been that psn wallet funds are sony's point system.

Ah, it doesn't say the money will disappear in 2 years though. That would be an awesome way to make money. That paragraph also highlighted that they are not operating as a bank (Otherwise, they will need to be regulated by the governments all over the world).

Once the prepaid card value is in the system, then yes, it will be in the system like XBL's point system. That's why it's called prepaid card.

But you don't have to use prepaid cards on PSN. However, if you use credit card, the wallet also keeps the change for later use so to speak.

Well I can make a bunch of little charges on my credit card I guess. Sony doesn't care if i make a $3 credit card charge for content ?


I believe there is a minimal transaction amount (US$5). It is needed to cover the transaction fees and other overhead.

You can buy $1 items in Playstation Home if you want.

Yes but PSN cards come in fixed amounts. Which means just like xbox live I will have my money in the system.


Didn't I say prepaid cards are like XBL points above ? :D

You don't have to use prepaid cards to shop on PSN.


Yes Valve should welcome sony to 2002.


There you go ! You are already familiar with a cash-based transaction system. Amazon being another.

[Silent_Buddha]

Here's the benefit breakdown for each.

For retailers:

Points - You still make a profit on games sold for a platform even if those titles are DD only.
Cash - None.

For the the console holder:

Points - No need to to have credit card/money transfer/etc, systems in place to conduct transactions. Provide retailers an incentive to continue carrying a console even if games are predominantly DD. Ability to price games/whatever at the same value no matter what the region/country. In the case of purchase disputes, easier to refund points than cash. No extra charges from CC companies for charge backs or puchases.
Cash - No need to determine point equivalent?

Consumer

Points - No matter where you go, and who you talk to, games always cost the same number of points. No need for parents to give CC info to yet another company. No need to worry about kids asking for CC info. Easy to give point cards as gifts knowing it won't go to other things (such as drugs, alcohol, whatever...). Yeah that last point is odd, but a few parents and grandparents have mentioned that to me. :p Ability to buy points at a discount (if a retailer wants to take a cut on their margin), thus instant discount for the consumer.
Cash - Easier to know at a glance what something costs.

Drawbacks...

Retailers

Points - None
Cash - No income, thus no incentive to carry or promote a console that is primarily DD.

Console Holder

Points - Must build in sizeable margins for Retailers.
Cash - Infrastructure to handle cash transactions. Credit Card company fee's for processing. No way to encourage retailers to carry or promote a DD only console. High margin on console may get a retailer to carry it, but without continuing influx of income from game sales, unlikely for retailer to promote your console.

Consumer

Points - Have to calculate what actual cost of game is. Might end up with unspent balance of points. Can't get cash refund for a purchase.
Cash - Presumably can't purchase cash at a discount. :) Usually don't have to worry about unspent balance, unless a minimum purchase denomination is required. Or if you are only allowed to deposit cash in set increments (5, 10, 15, etc US for instance), in which case, same drawback as Points.

With regards to that last point, that's a problem I have at some places that allow direct cash transactions, but you must deposit in cash blocks before you can buy. Basically all the drawbacks of points combined with all the drawbacks of cash.

Regards,
SB

[specwarGP2]

Yes but PSN cards come in fixed amounts. Which means just like xbox live I will have my money in the system.

If you have a credit card why are you buying PSN cards?

[draconian]

Here's the benefit breakdown for each.

For retailers:

Points - You still make a profit on games sold for a platform even if those titles are DD only.
Cash - None.



That doesn't make sense. Why would points give you the ability to make profit but not in the cash system?


For the the console holder:

Points - No need to to have credit card/money transfer/etc, systems in place to conduct transactions. Provide retailers an incentive to continue carrying a console even if games are predominantly DD. Ability to price games/whatever at the same value no matter what the region/country. In the case of purchase disputes, easier to refund points than cash. No extra charges from CC companies for charge backs or puchases.
Cash - No need to determine point equivalent?

Easier to refund points? I can't see how. Also, the rest of what you said above isn't valid.


Consumer

Points - No matter where you go, and who you talk to, games always cost the same number of points. No need for parents to give CC info to yet another company. No need to worry about kids asking for CC info. Easy to give point cards as gifts knowing it won't go to other things (such as drugs, alcohol, whatever...). Yeah that last point is odd, but a few parents and grandparents have mentioned that to me. :p Ability to buy points at a discount (if a retailer wants to take a cut on their margin), thus instant discount for the consumer.
Cash - Easier to know at a glance what something costs.

Drawbacks...

Retailers

Points - None
Cash - No income, thus no incentive to carry or promote a console that is primarily DD.

Console Holder

Points - Must build in sizeable margins for Retailers.
Cash - Infrastructure to handle cash transactions. Credit Card company fee's for processing. No way to encourage retailers to carry or promote a DD only console. High margin on console may get a retailer to carry it, but without continuing influx of income from game sales, unlikely for retailer to promote your console.

Consumer

Points - Have to calculate what actual cost of game is. Might end up with unspent balance of points. Can't get cash refund for a purchase.
Cash - Presumably can't purchase cash at a discount. :) Usually don't have to worry about unspent balance, unless a minimum purchase denomination is required. Or if you are only allowed to deposit cash in set increments (5, 10, 15, etc US for instance), in which case, same drawback as Points.

With regards to that last point, that's a problem I have at some places that allow direct cash transactions, but you must deposit in cash blocks before you can buy. Basically all the drawbacks of points combined with all the drawbacks of cash.

Regards,
SB

well, we've been through all your points above. And the vast majority of the claims aren't valid.

There is very little difference between a cash and points system.

and one more time, sony does not operate a cash system. They are points also, it just happens to be that their points are called dollars and happen to correlate perfectly with the us dollar.

[corduroygt]

If something costs 7 bucks, I want to be able to buy it directly for 7 bucks, and not worry about having to buy 10 bucks worth of points and then have 3 bucks remaining on my account. That 3 bucks just lost value because it changed from something I can use for anything (money) to something I can only spend within a store. That's why PSN is superior for consumers that are over 18 and have a credit card.

Also I wonder how Apple does it with 99 cent iphone apps, do they charge credit cards for a buck each time?

[Shifty Geezer]

Here's the benefit breakdown for each.Very much wrong IMO! You're confusing a whole load of arguments and comparisons. Appart from the typical confusion of "Live vs PSN" instead of "Points vs cash", you have even pulled in DD only consoles into the argument! And the fact you raise "can't buy cash at a discount" shows you haven't read the thread, because you can. In essence the difference between cash and points is the difference between the currency symbol at the beginning/end of the amount. Everything else - buying the currency, regional currency variations, how the currency is handled once bought - has the same issues irrespective of what these companies call their currencies.

eg. In this example of yours -
Points - Must build in sizeable margins for Retailers.
Cash - Infrastructure to handle cash transactions. Credit Card company fee's for processing. No way to encourage retailers to carry or promote a DD only console. High margin on console may get a retailer to carry it, but without continuing influx of income from game sales, unlikely for retailer to promote your console.
There's nothing stopping MS offering a service where you can buy directly the required points to buy DLC using your credit card. "I want that game at 800 points but only have 600 in my account. I'll use my CC now to buy another 200 points." The fact MS choose not to offer this has nothing to do with the limitations of a point-based system. Likewise Sony could have chosen to not support CC transactions and instead require payment cards to be bought just like Live, only they'd be labelled "£50" instead of "10000 points."

The advantage of point cards there is you can use the same cards everywhere, whereas cash cards would need to be regional. Other than that, the mechanics are identical. What everyone is comparing here are the different implementations of DLC payment by MS and Sony, not appreciating that the differences could exist if they both offered cash systems or point systems!

[Billy Idol]

Sony has a minimum £5 payment to PSN, meaning money sitting in the bank you can't spend. Again, this isn't a matter of points versus cash, but how the systems are implemented. There's nothing to stop MS allowing direct point purchases as needed if they wanted, or Sony fixing PSN crediting to payments in multiples of $10.

Hu?
Usually, I pay directly with my Creditcard exactly the price I need to when I buy something in PSN!

[Rolf N]

Hu?
Usually, I pay directly with my Creditcard exactly the price I need to when I buy something in PSN!It doesn't enforce 5£ steps, but a 5£ minimum. Above that, you can pay exact amounts. Probably has something to do with cc fees on tiny transactions.

[Billy Idol]

It doesn't enforce 5£ steps, but a 5£ minimum. Above that, you can pay exact amounts. Probably has something to do with cc fees on tiny transactions.

Ah, ok...thanks for explanation!
I typically pay EU6.99 or 9.99 for a DLC in PSN, that is why I never realized it!

[Shifty Geezer]

Yes. If you want to buy a £2 DLC thing, and have no credit, you need to credit £5 minimum to buy the £2 thing. If you then want to buy a £4 thing, you have £3 in credit, you need to add another £5. But if you want to buy something for £6.39, you can pay exactly £6.39. In that respect there's zero overhead. However, due to an accumulation of leftover pennies, I did end up buying a 20p avatar just to make use of 20p credit!

This is something easier to manage with cash versus points, but you could do similar with points if direct purchasing of points was allowed.

As for transaction costs, card fees aren't that high now that banks have sorted out microtransaction fees. PayPal offer a microtransaction fee structure in addition to the normal one, better suited for selling very cheap items. I'm sure a huge volume seller could negotiate good deals.

[patsu]

and one more time, sony does not operate a cash system. They are points also, it just happens to be that their points are called dollars and happen to correlate perfectly with the us dollar.

If you pay by credit card, it's a "real world currency" transaction. Unless your purchase is less than $5, then it's more like a microtransaction, which they'll always charge $5 minimal.

I believe they will lose money if they let you charge microtransactions using credit card directly. The credit card processor has an overhead (in this case, $5 is the smallest amount they can support).

Yeah, Silent_Buddha mixed up DD and cash/point-based transaction. Stores can make money from DD purchases too. Just look at how PSN prepaid cards and PSP Go games handle it.

The rest of his points are invalidated by the similarity of PSN prepaid cards with XBL point systems.

[Silent_Buddha]

eg. In this example of yours -There's nothing stopping MS offering a service where you can buy directly the required points to buy DLC using your credit card. "I want that game at 800 points but only have 600 in my account. I'll use my CC now to buy another 200 points." The fact MS choose not to offer this has nothing to do with the limitations of a point-based system. Likewise Sony could have chosen to not support CC transactions and instead require payment cards to be bought just like Live, only they'd be labelled "£50" instead of "10000 points."

The advantage of point cards there is you can use the same cards everywhere, whereas cash cards would need to be regional. Other than that, the mechanics are identical. What everyone is comparing here are the different implementations of DLC payment by MS and Sony, not appreciating that the differences could exist if they both offered cash systems or point systems!

Just going to focus on this point here since I don't have a lot of time.

Yes, they could put in a system where MS itself handled the cash transactions, but that's added cost. Printing out a point card, setting an MSRP on it, and selling it to retailers with a hefty retailer margin built in is cheaper and sets the foundations for a possible DD only future.

Not having to worry about setting up an infrastructure to handle multiple currencies in multiple countries is a rather large benefit of of a point card that is universal in all territories. Although the code printed on the card may be only valid in certain regions. Pricing, billing, cash transactions, CC transactions are all then handled at the point of sale with no additional costs for the company making the point cards.

Just look at the mess of payment options for many online games and retailers (that take orders from NA/Europe/Asia) that market to multiple countries and regions. It's a financial mess of options, and often times many countries are still left out of the loop due to the difficulty of handling financial transactions directly in multiple different countries/regions. There's a strong move for many of the F2P (free to play, pay for bonus/good stuff) online games transitioning to Paid cards (basically point cards for their system only) rather than trying to enable CC payments in all countries (virtually impossible). Rather than doing that, it's far faster and cheaper to manufacture point cards and sell them at retail in most countries.

Regards,
SB

[patsu]

Actually, they usually outsource multi-currency transaction to someone else (e.g., the bank giving you the merchant account). So it's the same API call.

Most merchants don't support credit card from other countries mostly because of fraud. Prepaid cards resolve that issue by getting the money early. Some merchants in those countries do COD also but it's not possible for virtual goods. There is no need to jump to a point system just because of this reason.

For value conversion, they will probably convert the $$$ to 1 HQ/regional currency for accounting. For points, you'll need to do so too.

[Shifty Geezer]

Just look at the mess of payment options for many online games and retailers (that take orders from NA/Europe/Asia) that market to multiple countries and regions. It's a financial mess of options, and often times many countries are still left out of the loop due to the difficulty of handling financial transactions directly in multiple different countries/regions. I agree that international currency purchases aren't straightforward. Merchant services like PayPal or WorldPay only offer some options and aren't universal. That said, are Live! points and regions universal, or also limited to regions, such that in some places you just can't use Live!? I thought it was the latter, suggesting elliminating regional differences isn't as simple a matter as switching from currency to points, but could well be wrong on my understanding of the state of Live! :D

Also regards added infrastructure, Sony already has it's own complete banking service set up in 2001, so using that will add no extra cost. And as Patsu says, there's nothing wrong with outsourcing the payment method to an established player. I think you'd have the localised payment issues with some people unable to buy as you say, but isn't that also a problem with Live!? And also you can offer payment cards for these places just like point cards, only they'd probably want localised printing which isn't as convenient as a points universal approach.

Edit : As for preparing for a DD future, games could be sold in store using voucher cards and you enter the code to download, providing the same retail situation as now only without the stock and with the option to buy direct online. I suppose no option to credit your account without buying a card will benefit retailers a little more as the MS way, there's no way to completely elliminate the retail chains, whereas with Sony and Apple's approach users have the option to do everything online without any middlemen.

[Florin]

I don't really get the problem with credit card payments, you can buy 99 cent songs on iTunes without problems, so why should the PSN be any different?

On the other hand, point cards do bring one advantage for consumers: You can use them to buy stuff in international stores that only accept national credit cards. There's already a lively market where Europeans buy US point cards just to have access to the US iTunes store, which has an infinitely larger collection of stuff, and even with the typical ~20% markup for these services, you get out ahead due to the Euro - Dollar conversion rate.

[AzBat]

IAlso I wonder how Apple does it with 99 cent iphone apps, do they charge credit cards for a buck each time?

From what I've seen it's seem that the Apple's App Store and iTunes works on the premise that you're not charged right away. The build up a set charges first, then deduct that from your credit or debit card. This way there aren't a whole bunch of small charges. Not sure but I think it's all charges on 1 day are sent at once.

Tommy McClain

[patsu]

On the other hand, point cards do bring one advantage for consumers: You can use them to buy stuff in international stores that only accept national credit cards.

Pre-paid cards do that too. It's meant for people who don't have credit card, or are uncomfortable to use credit card.

The only real difference is a point system has a proprietary currency whereas pre-paid (cash) cards are based on real-world currency.

[zed]

I don't really get the problem with credit card payments
A bit off tangent but in case some ppl are unaware of how creditcards generally work

item A in shop
$100 cash cost
$102 cc cost (banks usually charge an extra 2% with CC transactions)

but off course shops dont normally do this or noone would use the CC's so what they do is raise the price of everything to hide the costs of CC
$100.50 cash cost
$100.50 cc cost

thus in effect all consumers are subsidizing those that co\hoose to use CCs

[upnorthsox]

I don't really get the problem with credit card payments, you can buy 99 cent songs on iTunes without problems, so why should the PSN be any different?

On the other hand, point cards do bring one advantage for consumers: You can use them to buy stuff in international stores that only accept national credit cards. There's already a lively market where Europeans buy US point cards just to have access to the US iTunes store, which has an infinitely larger collection of stuff, and even with the typical ~20% markup for these services, you get out ahead due to the Euro - Dollar conversion rate.

I'm a little shocked by this too as I've certainly been able to charge less than $5 on PSN (just did a $1.38 the other week) and I'm under $5 almost always on itunes. I guess I have a better bank/card then the rest.

From what I've seen it's seem that the Apple's App Store and iTunes works on the premise that you're not charged right away. The build up a set charges first, then deduct that from your credit or debit card. This way there aren't a whole bunch of small charges. Not sure but I think it's all charges on 1 day are sent at once.

Tommy McClain

I've seen a day's total go all at once, and maybe even a couple days together but never longer than that. I suspect they might get better terms from the bank if they're willing to bunch them up on a daily basis.

On the flip side, I can submit my Verison payment in one window and refresh my bank account in another and watch the transaction go in realtime. Those money grubbers are something else though.

[Shifty Geezer]

This conveniently timed announcement (http://www.edge-online.com/news/microsoft-alters-360-points-structure)has MS changing their point cards to multiples of 400, to elliminate those leftover pennies. Now MS has a 'spend $5 on 400 points, spend 400 points on a game' purchase path, versus a direct 'spend $5 on a game'. This highlights how cash or points doesn't affect how the systems are applied, and any approach can be used with any system.

Oh, and this is in the US, where in Europe it stays at multiples of 500, showing regional variation 'just happens'!

[AzBat]

One slight note... actual Point "cards" in US stores have always been 1600MSP($20) or 4000 MSP($50). You have also always been able to purchase points on Zune.net in multiples of 400MSP($5). The recent changes to the point packages were only for those sold through the Xbox 360 itself & Live Marketplace on Xbox.com.

Tommy McClain

[catisfit]

I never understood the PSN prepay cards (from my own personal perspective of having a debit card and just buying direct), but then Zavvi.co.uk were selling £20 cards for £15.95 last week (they may still be), so I'm happy to take the downside of locking in a set amount of cash against future purchases in the knowledge that they'll be 20% cheaper when I do! I don't know who absorbes that 20%, but as a consumer I don't really care.

EDIT: They still are http://www.zavvi.com/games/games-accessories/psn-live-card-20.00/10062224.html

[Shifty Geezer]

I presume Sony will take the hit, mitigating some revenue from purchases. And there must be a markup on those cards too for stores to stock them, so the hit must be more than 20%.

[corduroygt]

I presume Sony will take the hit, mitigating some revenue from purchases. And there must be a markup on those cards too for stores to stock them, so the hit must be more than 20%.

The shop already paid Sony for the card and while they paid less than 20, there is no indication that they paid less than 16 for it. That might be a store discount/loss leader for all we know. All the while Sony is earning interest on the money they already received.

Also, 27% of all gift cards bought were unused in 2006. While the ratio is less in this economy, some of those PSN cards that Sony receives money for, will never be claimed. I'm sure they ran the business analysis on this before determining the wholesale price of cards. I'm sure it's the same for MS or any business that sells gift/point cards.

Points or cash is the same as long as you can buy exactly the number of points you need to me. A minimum is understandable, but if MS can sell 400 points, there should be absolutely no reason you cannot buy 600 points online and have to go for 800 instead in an online transaction where no cards are printed or distributed to retailers.

[Florin]

From what I've seen it's seem that the Apple's App Store and iTunes works on the premise that you're not charged right away. The build up a set charges first, then deduct that from your credit or debit card. This way there aren't a whole bunch of small charges. Not sure but I think it's all charges on 1 day are sent at once.

Tommy McClain

Well, I just bought a 99 cent Monster Truck DLC on Steam for Just Cause 2, I'll keep an eye on my cc statement to see how they do it :)

[patsu]

Another example of pre-paid card discount:
http://www.joystiq.com/2010/04/19/target-offering-discounted-wii-xbox-live-and-psn-point-cards/


If you've been waiting for a marginal discount before bulk-buying the fake currency required to download content off your consoles' online marketplaces, Target's got you covered. Until this Saturday, you can stop by your local bullseye-branded retailer and grab a $20 Wii Point Card, Microsoft Point Card, or PlayStation Network card for just $17.

[Florin]

Well, I just bought a 99 cent Monster Truck DLC on Steam for Just Cause 2, I'll keep an eye on my cc statement to see how they do it :)

There was an actual 99 cent charge on the statement. So hey, it is possible.

[patsu]

Where do you live ?

PayPal can accept $0.50 credit card transaction based on their micropayment merchant account. Apparently, their processing cost is much lower:
http://www.creditcardprocessing-r-us.com/Credit_Card_Processing_Blog/2010/01/how-to-open-a-paypal-micropayment-account/

I don't know if this applies to all currencies.

[Florin]

Amsterdam

[patsu]

Ah, not familiar with Amsterdam. :)

[Xalion]

There was an actual 99 cent charge on the statement. So hey, it is possible.

There are two fees that are associated with credit cards.

The first is a monthly access fee. The second is a transaction fee. The monthly access fee tends to be somewhat standard. The transaction fee varies from company to company. Big retailers like iTunes are able to make deals limiting this fee.

Last I heard, the breakdowns for iTunes are roughly the following:
$0.69 - goes to record label
$0.10 - goes to credit card companies
$0.05 - goes to internet company
$0.05 - operating overhead
$0.10 - profit

Now, those are likely averages and not a pure breakdown by song. So the credit card fee may actually be $2.00 but there are enough people bying 15 songs at a time or gift cards to make up for the people buying $0.99 songs with each purchase.

Back to the PSN, the minimum required purchase is probably to cover the two credit card fees. Sony isn't the only company to do this to protect themselves from a large number of small transactions. Especially if they envision future content to be rather inexpensive, this is a fairly good safeguard.

Retailers don't usually disclose the exact amount that the per transaction fee costs them. For good reason too. I wish I could find the story, but not too long ago there was a lawsuit involving an internet site. The person lost and was ordered to pay a fine. Because the judgement provided that the fine could be payed in checks and set up a fund to allow multiple deposits, the person asked all of their supporters to send checks for $0.01. I believe the court stepped in and stopped it, but if that had been allowed, the person collecting the debt would have lost an enormous amount of money on check cashing fees. If retailers like iTunes that don't force a minimum transaction fee gave out hard information on their transaction fees, then they would open themselves up to this type of attack.

[AzBat]

There was an actual 99 cent charge on the statement. So hey, it is possible.

Interesting. Thanks for the follow-up.

Personally, I like buying my point cards with cash or my debit card at local stores. Don't want a card on my account. Sometimes when I'm out of points it is nice to be able to use a card, but that's few & far between.

Tommy McClain

[KongRudi]

It's all about the money..

With the point-system, people won't be feeling that they spend money - they spend points - so people/consumers will feel more comfortable spending points than actual money.
It's also harder for the consumers to keep track of the transactions, of how much they spend, especially at first when they start spending points.

But that's not why it's there, the main reason they use it is because the company would rather have you give them a risk-free and interest-free loan.

When you spend 7.99$ and charge it to your credit card, that's it - small transaction done instantly. You have 7,99$ less in the bank earning interests for you, while the company only got 7,99$ more to play with.

However if you buy a Marketplace point-card for 50$ - you do a large transaction with Microsoft.
You now have 50$ less in the bank earning interest for you, while Microsoft have 50$ more to play with, or earn interest if they want.
You're stuck with lots of points, wich you can only spend in their store, so you're giving Microsoft a risk free loan, wich they will pay back when you shop at their store, the points you've bought are useless elsewhere.

Same with Sony if you decide to fill up the PSN-wallet, instead of charging each transactions.

So basically, the only difference for consumers is that with a point system, or full PSN-wallets, you're giving away your bank-interests..

[Shifty Geezer]

Which at 0.5% is a terrible loss... :p

[corduroygt]

I'd rather loan my money for free to PSN and XBL rather than Greece for a high yield for example :)

[KongRudi]

Which at 0.5% is a terrible loss... :p

If I were you, I'd change bank.. :P

[dobwal]

I'd rather loan my money for free to PSN and XBL rather than Greece for a high yield for example :)

Given that the EU probably won't let Greece default, I rather bet on Greece bonds especially given their almost 17% yield on 2 year notes.