last100 has an interesting post on Microsoft Points, a kind of virtual currency for the Xbox Live Marketplace and the Zune Marketplace. In a lot of ways, Microsoft Points act just like real money and functions in a similar way to Paypal. Mack D. Male wrote that "if you see a movie you want to buy on Xbox Live, you just need to make sure you have enough points available in your account. The main difference, of course, is that you don’t “purchase” money, but you do purchase Microsoft Points."
Mack says that "Microsoft Points can be purchased online using a credit card, or from a participating retail location in the form of a Microsoft Points Card. As with airtime minutes on your mobile phone, you purchase allotments of points at once, ranging from 400 to 5000 points. The price varies all around the world, but in the United States 80 Microsoft Points is equal to $1. If you live in a country with government sales tax, you’ll pay that on top of the price of the points."
The big question is can Microsoft Points be extended and used across Windows Live in the near future, as an equivalent to the likes of eBay's Paypal or Google Checkout? Microsoft blogger Robert McLaws wrote about this idea back in January, and speculated that it might be called Windows Live Payments. This was based on a Bill Gates comment in February, in which Gates hinted that that online micropayments is an area Microsoft will pursue.
As last100 noted, almost all of the major forces in the digital living room have a payments system of some sort. Sony has the PlayStation Network Card, Nintendo has Wii Points, Google has Checkout, and Amazon recently launched FPS. Sony and Nintendo’s systems are virtual currencies, whereas Google and Amazon’s are payment services. Microsoft could be the first company to offer both by opening up Microsoft Points to the world.
Probably the first thing that comes to mind when considering such a system across Windows Live is: look what happened to Passport. Microsoft's 90's identity system was a failure, with consumers ultimately not trusting Microsoft to manage their online identities. So if users don't trust Microsoft with their ID, what chance they will trust Microsoft with their money?
But I think the micropayments infrastructure is due for a shake-up. Paypal has gotten almost arrogant of late, with their ridiculously high fees and honey-catching account structure (tip: don't sign up for a "premium" account, you end up paying much more in fees than a simple "personal" account). Google Checkout so far has little to offer ordinary consumers, so right now Paypal enjoys a virtual monopoly. So I for one would welcome a Windows Live Payments system. OK, this goes beyond a virtual currency - which Microsoft Points is right now - but the opportunity is there to extend into micropayments.
What do you think, will Microsoft Points be used in Windows Live services to enable a micropayments system? Would you use it?
Note: This post is based on and inspired by Mack D. Male's article on last100.
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>>"We want a Paypal competitor"
Yes, yes, yes - I couldn't agree more! Paypal don't seem to do a brilliant job...and the web certainly needs a few, very good alternatives. I'm not sure if MS Points is the way to go in future...but it could be (we'll have to see!) If MS Points ties-in too closely with other Microsoft systems (such as integration with 'Windows Live') then will that be at the risk of excluding customers who don't want to use those Microsoft-only systems?
Interesting article.
Posted by: Matt Robin | August 15, 2007 8:05 PM
You didn't mention Amazon's Flexible Payment Service as a competitor to Paypal. Oversight?
Posted by: Jay Neely | August 15, 2007 8:45 PM
I personally love PayPal. If their fees were 'ridiculously' high, you would see alternatives.
Instead, what you see is 1% cash back using their free debit card, 5.03% interest on your account balance with no minimum, and a way to transfer money that is better than any bank. In fact the interest you get is better than most consumer bank type CDs.
The personal account is fine, if you don't use the service much. There are advantages to the premium acount, and I think it's well worth it to pay less than $30 to receive $1000 from anywhere instantly and have access to it via debit card immediately.
Anyway, bring on the competitors, I'd love to see more so people see that PayPal's fees are about as low as any are likely to get anytime soon.
Posted by: Morgan | August 15, 2007 11:39 PM
What's with those comments on PayPal? When you add in monthly minimums, statement fees, AVS fees, chargeback fees, and higher rates for business & international cards usually not even published by merchant services companies, merchant accounts often come out more expensive than PayPal.
Plus, PayPal takes on most of the risk. Fraud can easily destroy a business, and PayPal does all the fraud screening. You can pay for a commercial fraud scoring service like MinFraud, again making PayPal look much cheaper, and still not come near their ability to assess the risk of a buyer and seller.
Lastly, personal accounts are useless. You can't accept credit card payments with them.
Posted by: Dan Grossman | August 16, 2007 10:49 AM
Also, I should throw in, the title for this post threw me off. I expected something about Microsoft Money, the personal accounting software, going online.
Posted by: Dan Grossman | August 16, 2007 10:58 AM
I agree that we need an alternative to PayPal. I do no feel that their fees are the problem. I have had my account for the last five years and have not personally had an issue.
I've had a few readers inform me of the issues they have had with their PayPal accounts through E-bay. I won't go into details but they are still holding their money. They were told that PayPal will send their money in six months and their account will not be reopened.
I thought this was a few individuals that were doing something wrong but in fact they are just selling there personal stuff for some quick cash. I feel this is why PayPal is doing this, since the sellers need the money.
I have been researching this topic and find it to be very common. 1 out of every 50 people that have an account with PayPal has it closed after they have sold their products and shipped them. PayPal informs them that they can either refund the money to the buyer or wait for six months to receive their funds. Since the sellers have already shipped their product they have to wait.
I feel that PayPal has become too cocky and their needs to be alternative for everyone to use. Individuals need to have more then one option when it comes to services such as E-bay.
Thank you,
Jason MoneySpace
Posted by: Jason MoneySpace | August 16, 2007 12:43 PM