What are the advantages/disadvantages of points vs dollars

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.

 

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.

 

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

 

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.

 

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!

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.

 

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.

 

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

 

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.

 

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

 

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.

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.

 

This conveniently timed announcement 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'!

 

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

 

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

 

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.

 

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

 

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

 

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

 

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-u...01/how-to-open-a-paypal-micropayment-account/

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

 

Amsterdam