What are the advantages/disadvantages of points vs dollars
- Thread starter draconian
- Start date
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 $0.01. I believe the court stepped in and stopped it, but if that had been allowed, the person collecting the debt would have lost an enormous amount of money on check cashing fees. If retailers like iTunes that don't force a minimum transaction fee gave out hard information on their transaction fees, then they would open themselves up to this type of attack.
Interesting. Thanks for the follow-up.
Personally, I like buying my point cards with cash or my debit card at local stores. Don't want a card on my account. Sometimes when I'm out of points it is nice to be able to use a card, but that's few & far between.
Tommy McClain
It's all about the money..
With the point-system, people won't be feeling that they spend money - they spend points - so people/consumers will feel more comfortable spending points than actual money.
It's also harder for the consumers to keep track of the transactions, of how much they spend, especially at first when they start spending points.
But that's not why it's there, the main reason they use it is because the company would rather have you give them a risk-free and interest-free loan.
When you spend 7.99$ 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..
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..
Which at 0.5% is a terrible loss... 
corduroygt
Banned
I'd rather loan my money for free to PSN and XBL rather than Greece for a high yield for example
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.
