Why Xbox Live Doesn't Take Exact Change

With ever-more tempting content on Xbox Live (like the awesome Exit), it's really frustrating to have to 'overpay' and buy Points in bulk. 1up got an official response from Xbox 360 group product manager Aaron Greenberg on that issue, explaining why the service always leaves you with a little bit left over: "The reason why we do that, the core reason, is around credit card transaction fees ... If we do this in bulk, we don't have to burden the consumer with the transaction fees, or ourselves or publishers. It's about keeping infrastructure costs down and I know sometimes it's frustrating because you end up with odd points, but we don't have any plans to change that." Greenberg also addressed why the service limits you to 100 friends on your friends list.

Translation

[acvh (120205)]

"We make more money this way."

Re:Translation

[Joe Jay Bee (1151309)]

Well, yes, but then there isn't really a viable infrastructure for micropayments. The closest we have is the credit/debit card systems, Visa/Mastercard/American Express et al, and they charge transaction fees on all payments, making it a rather expensive proposition. I can see why Microsoft would rather spend 50 cents on a 10 dollar debit card payment than 50 cents on a 10 cent debit card payment.

Re:

[acvh (120205)]

I can think of a few possible alternatives:

let users run a tab, and bill their card when the tab hits a certain amount.

set up a bank. don't charge yourself for credit card processing.

Re:

[ByOhTek (1181381)]

The tab probably wouldn't work - I could see users switching when their tab gets below a certain point, and there's a lot of time where the user is getting something for "free", when MS could be using that money to make more money.

A more rational point would be a minimum purchase: If a point is $0.01, then a minimum of 500 points per purchase is allowed.

But actually, the assumption of MS is probably this:
1) The users won't use less than $X to reinvest and make money off of it anyway
2) n users * $X = a fair

Re:Translation

[king-manic (409855)]

Doesn't work that way, I'm afraid; if you want to accept Visa, Mastercard... any cards that exist, basically, they'll want a cut and will take fees. Then there's the infrastructure cost of setting up a whole damn bank... no, makes far more sense than selling points in blocks of 500. ;)

Anyway, banks are bad enough without Microsoft running one... :P

Actually Visa/MC take a percentage, and with the small family Chinese food place we owned there was no min charge. Thus $4.00 = $0.20 fee. $400.00 = $20.00 fee. The rounding might affect things since they tend to round up but the % taken is off of our total monthly and not individual transaction. So MS is talking out there ass unless they signed a really retarded deal with Visa/MC.

E-commerce does vary and does have many per transaction set ups but I fail to believe MS would not have a more preferable contract.

Re:Translation

[peragrin (659227)]

three words.

iTunes Music store. Billions of dollars worth of music sold. Credit card companies charge fixed percentages. a $.99 charge costs $0.02 for the transaction.

Also the xbox live credits aren't full dollar amounts either. So you can't get a one-one price ratio. MSFT did this to appear to be cheaper when they really aren't.

This is only about MSFT greed and nothing more. MSFT can collect interest on your money sitting in their bank accounts while you try and figure out a way to spend it.

Re:Translation

[VertigoAce (257771)]

Apple counts on customers buying multiple songs during the same day. They will group all of the tracks together over the course of a day or so and send one transaction to the credit card company. Sure, there's nothing stopping you from buying one track and waiting for the transaction to happen before buying another.

I imagine with the Xbox marketplace people tend to make small purchases here and there, not a bunch of little purchases in the same day. So you prepay and the credit card transaction happens just once.

Finally, all of the complaints seem to be very US-centric. With the point system, MS can post a piece of content globally and list the price as 400 MS Points. In the US, I know this is $5. Somebody in another country knows how much points cost in their country. So they don't need to know today's exchange rate, content stays a fixed price, and MS doesn't need to come up with dozens of local prices for each and every piece of content. Right now the only content that isn't a global point value is the video marketplace, since the licensing fees vary by country.

Re:Translation

[MooseMuffin (799896)]

Well, I suppose this transaction fee explanation is actually a legitimate one, but now it brings me to another question. Shouldn't I get some kind of discount for buying points in large quantities? Me buying 2000 points at once saves them money over me buying 500 points four times doesn't it?

Re:

[plague3106 (71849)]

Did your card have Visa or MC on it? If its Visa, I believe they are not allowed to put minimum purchase amounts before you can use the card. So if you want to spend $1 and you insist (they can REQUEST you use cash) and they still refuse, you can turn them in. Typically they will be fined.

Also, I know someone that takes debit / credit cards; he prefer I use debit over credit because there are less fees to take debit vs. credit.

Re:

[ByOhTek (1181381)]

what about stores that charge a special fee for purchases under a certain amount?

I went to a store once,a nd they charged $1.50 for any purchase under $5.00 on a credit card.

Re:

[mjpaci (33725)]

Are you in the USA? I tend to think that that policy is against their Terms of Service...

Re:Translation

[rgbscan (321794)]

I work at a bank and we get this complaint all the time. Check out the bottom of page 14: http://www.usa.visa.com/download/merchants/rules_for_visa_merchants.pdf [visa.com]. This is clearly against visa's terms, and if you report it to both Visa (800-VISA-911) and your bank, chances are the merchant will get a stern talking to by a visa rep.

Re:

[Mr2001 (90979)]

In that case, you can turn in the third party. This obvious trick isn't a legitimate way of getting around Visa's rules. Call 1-800-VISA-911 next time someone refuses to accept your Visa card because of the purchase amount, or adds an extra fee, or won't complete a transaction unless you show your ID.

That's just unfair.

[i kan reed (749298)]

Many many many retail establishments prohibit you from making credit card purchases under $5 because they actually lose money on the transaction thanks to fees. Nintendo does the exact same thing with Wii Points, except you can't purchase those through your console, which allows a greater freedom for input when purchasing online, though I'm sure there's a minimum. The alternative is to raise prices, or using a horrifying shopping-cart type system which users would abhor.

Re:

[edwdig (47888)]

Nintendo does the exact same thing with Wii Points, except you can't purchase those through your console, which allows a greater freedom for input when purchasing online, though I'm sure there's a minimum.

Huh? The Wii Shop Channel lets you buy points in amounts of $10, $20, or $40. Or you can buy cards with points at retail stores. How else are you buying points?

Re:That's just unfair.

[joggle (594025)]

I think it would be more fair if you could buy points in multiples of what you anticipate buying. So there could be an option to purchase 1200 points, 2400 points, etc. MS claims to be concerned about many small CC transactions. So just give more options when buying points above 10 dollars or whatever (as opposed to having to buy in multiples of 500 no matter what). This would seem to be trivially easy to implement. I think Microsoft intentionally does this so that virtually everyone carries a balance, allowing Microsoft to earn interest or in some other way capitalize on what is effectively a large savings account to them.

Similarities (or trolling, here in /.)

[xtracto (837672)]

Yeah, similarly to the question of:
Why are the Nintendo VC games so overpriced, or the Wii points.

Seriously, with great things as Emulators and torrents I do not understand why do they sell games at £7 each!

Re:

[Bill, Shooter of Bul (629286)]

I think the real reason, is to avoid angry complaints when you have to spend more per point the fewer points you'd buy. If they just passed the transaction costs on to the user, it would get wierd. I don't use box so these values are fictitious, but you could end up spending a buck on 50 points or 1,000 points for $10. It would look like they were ripping you off, and there would be a sliding scale if you could specify the number of points you bought. probably not worth the customer complaints of curious pr

What a load of crap!

[nickj6282 (896871)]

What a load of PR crap! We know why you can only "buy in bulk", it's because very few things on XBL come out in 500 point increments. You almost always buy more than you need, but then next time if you're 20 points short for what you want to purchase, you get more and have a 480 point surplus. It's obviously specifically designed to be a vicious cycle of always having either too much or being just short.

The iTunes store doesn't have an issue selling me downloads a buck at a time, obviously the credit card fees aren't breaking their balls. WTF Microsoft?

Re:

[TooMuchToDo (882796)]

Obviously, Apple was able to work out a better credit card processing deal then Microsoft was. Also, remember iTunes does a huge volume. Xbox Live? Not so much. Other companies do the same thing to handle the processing costs (Enom, the domain registrar comes to mind). If you don't like it, don't use them, but don't whine about it if they've stated they're not going to change it.

Re:

[TooMuchToDo (882796)]

If they've made a deal with a processing company, they can bundle all of the charges together during their nightly settlement run and get a lower per-transaction charge (as the transaction charge/percentage is calculated by volume with most processing companies).

Re:

[TooMuchToDo (882796)]

They probably ARE doing this now, but don't have the same volume as iTunes.

Re:What a load of crap!

[CatPieMan (460995)]

If you've ever bought a couple songs for 2-3 days in a row, you've noticed that you only get 1 charge on the credit card. Apple will hold off charging you for a couple days to try to lump a couple purchases together to save on the CC transaction charges.

No, there really is something to this

[Sycraft-fu (314770)]

Credit card processors charge you a per transaction fee. That is just how it work, that is how they make money. Every time you accept money, regardless of the amount, on a card they charge you. That's why you'll find restaurants with things like "$5 minimum credit card purchase." At a certain point you literally don't make any money on a transaction because the fee eats it all up.

So, suppose MS allowed you to buy points in arbitrarily small amounts. This is going to decrease the amount they make because people will do it. There will even be transactions (like people buying 1 point) that they lose money on. This means they have three choices:

1) Make less money. They aren't going to pick this. XBL is not run as a public service, they are in this to make money. As a practical matter they need a net profit here to help offset the costs of the Xbox hardware.

2) Pass the costs on to their developers in the form of lower payments. Bad option, you don't pay enough, people just won't develop for XBL.

3) Pass the cost on to the consumer. This is what would happen.

It is the same problem with micro-payments you've seen elsewhere. If you want to have small payment increments, credit card fees can kill that. This is one solution to the problem. Maybe not the best solution, but then if you've got a better one perhaps you should propose it to them? "Just eat the fees and make less money," isn't a solution.

Please remember: If you disagree with their business model, you are free to not buy their products. The Xbox in general, and certainly XBL and the marketplace, are not necessary to life. You can just not play their game if it is unacceptable to you.

Re:

[Pluvius (734915)]

4) Don't have a point system. Where did people get the idea that you have to have a point system for online transactions? Just charge people whatever the item is worth and you won't have "people buying 1 point."

Rob

Re:

[Tetsujin (103070)]

What a load of PR crap! We know why you can only "buy in bulk", it's because very few things on XBL come out in 500 point increments. You almost always buy more than you need, but then next time if you're 20 points short for what you want to purchase, you get more and have a 480 point surplus. It's obviously specifically designed to be a vicious cycle of always having either too much or being just short.

Hm, I bet it's a conspiracy. Probably the hot dog people are involved...

100 friends is harcoded client side

[badboy_tw2002 (524611)]

I don't know why the number was set, but it will never change because every game would start crashing. Sorry!

Re:

[j235 (734628)]

"100 friends ought to be enough for anyone."

Carnie System

[SunnyDaze (1120055)]

I believe the reason they do this is the same reason when you go to a carnival you have to buy tickets for a ride. So you never really know how much things cost. After all if it was just about making bulk payments easier then the price of things would match those bulk costs. Basically you'll always end up with change and figure you might as well buy so more so you can get rid of your leftover. All in all I hate the system.

Live and credit cards

[king-manic (409855)]

Live has the worst online transaction set up of all three. The PSN and Wii networks are 3 clicks to remove your CC. The live network is a 30 minute call followed by a 30 day delay to unhook your Credit Card from your xbox /360. They require passwords, emails used, gamer tag, you CC#, and it's expiry date. It's asinine. You may replace your card more easily but to actually remove one requires too many hoops to jump. Where as the PSN and Wii allow you to simply remove it form the account without needing to call, and it's removed instantly. They actually required me to speak with a call center manager to remove my card. After that I will not consider buying anything from the live network again. No membership, no games, nothing.

Re:

[king-manic (409855)]

And you assume the quick procedures are doing anything more than hiding it from you?

Need i be subject to 2 verifications of information, being forwarded through 3 people. 2 of which ask for exactly the same information and a 30 day delay to remove a credit card? I don't think it's merely hiding the details. They made an intentional choice to make removing hard. A while ago I worked for a regional telecom in the call center, we took CC for pre-authorized payment. to remove it you need 1 piece of strong ID like driver licence if on account, account number if they had it, sin if on account,

Change in Microsoft's pocket

[getnate (518090)]

Say there are 2.5 millions users with 160 points left over ($2.00). That 5 million for Microsoft. Plus having some extra unspendable cash in someones account makes then more likely to add a few bucks to buy something else. Then they have change left over again, rinse, repeat.

OK But

[MBCook (132727)]

OK, I'll accept that. The Wii works the same way, after all. Now how about telling me why you can't peg points to the currency like Nintendo does with the Wii? Why is it that MS points are 80 for $1 [wikipedia.org] in the US? Why the weird exchange rate? Why can't it be 100:$1 like the Wii? Or at least something I can do math with easier, like 25:$1?

Re:

[appleguru (1030562)]

Mainly because they don't want you to have a good "real world" cost sense of what you're buying in hopes that you spend more.

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[dfn_deux (535506)]

MS points aren't pegged to the US dollar because they don't cost the same in every market. I think the wikipedia page for live points gives a cost break down. I think it is stupid, but look at the cost of music through the zune store and it seems that at an equivalent of 98.5 cents per track that the savings of the bulk purchase is passed on vs the 99 cents it costs through itunes ;)

What I want to know

[Lost Engineer (459920)]

is why there's no 1-to-1 correspondence with dollars or euros or fcking rupees for all I care. Beyond obscuring the cost, the exchange rate seems deliberately chosen to make things seem cheaper than they are.

That said, we're talking about a grand total of a few bucks here. I put more stock in the whining about paying for online access.

Full disclosure: I am a XBL subscriber and I want new rock band songs!

The answer lies in the interest...

[BobMcD (601576)]

Every interest cycle that has them keeping more of your pennies means more interest in their pocket. And if you have enough of these copper babies, they add up, and so does their interest. Sure, they'll have to 'pay' out the content eventually, but meanwhile they are the ones collecting the interest, not you.

By the way, this is the same reason the Fed's are quite happy to help you over-estimate your income tax burden when you prepay.

It Should Be An Option...

[SlashdotOgre (739181)]

I hate it when stores use transaction fees as an excuse for not accepting credit cards (or creating artificial minimums). I can't tell you how many times I'd eat the fee and buy something, but walked away instead because that wasn't an option.

I'm fairly confident the real reason they don't allow small increments is the same reason they use points -- to obscure the real cost from the consumer. As an engineer I have virtually no background in physcology, but I can say from personal experience, it's easier to spend 1000 points than $5 (even when the value of points is much greater than the dollar amount). I'm also confident that designing the system so it's easy to end up with an odd amount of points that requires a bulk purchase to do anything again was intentional (eg. I have 200 Wii points right now and the cheapest purchase is 500).

Re:It Should Be An Option...

[plague3106 (71849)]

I hate it when stores use transaction fees as an excuse for not accepting credit cards (or creating artificial minimums). I can't tell you how many times I'd eat the fee and buy something, but walked away instead because that wasn't an option.

Visa (and I imagine MC) prohit a store from displaying the VISA logo and then refusing based on minium (or maximum) purchase prices. If the store refuses, you can contact your bank, who will contact Visa. Visa typically fines the stores that violate the policy.

I did this once, and shortly after the signs saying "$10 min. card purchases" was removed.

Re:

[zippthorne (748122)]

It's not that simple. The credit card organizations prohibit the stores from passing their transaction fee on to customers as a condition of having credit cards as an option. Brick & Mortar stores presumably price this into the regular prices for things, or just eat it as accepting credit cards increases the volume of the store.

The problem comes in with very cheap items that really don't make sense to price above the transaction fee. Would you, for instance, pay a couple of bucks on a piece of bubble

Re:

[Ash-Fox (726320)]

It's not that simple. The credit card organizations prohibit the stores from passing their transaction fee on to customers as a condition of having credit cards as an option. Brick & Mortar stores presumably price this into the regular prices for things, or just eat it as accepting credit cards increases the volume of the store.

I think Microsoft should make a round number for a minimum of points, so you can at least buy two things EXACTLY with the minimum number of points you buy. This tactic is often u

It's called breakage

[Evro (18923)]

... getting people to pay for stuff they won't use. There are entire industries centered on exploiting this concept, most notably the prepaid calling card market. You pay for $20 and get $17 worth of product, and you can't use the remaining $3 for anything, so the company makes extra money on you. You see it everywhere... reward points on credit cards, etc.

http://en.wikipedia.org/wiki/Breakage_(accounting) [wikipedia.org]

Sadly Similiar in Nintendo's Case...

[morari (1080535)]

While I love the Virtual Console, the bulk points system is broken. It's deliberately setup so that you always either have too few or too many points. For example, I bought 1,000 points. I grabbed the Opera Browser for 500 and then was going to get Super Mario Bros. - The Lost Levels with the other 500. It turns out that The Lost Levels cost 600, as opposed to the 500 that every other NES game does. This is probably due to it kinda-sorta being an import, but still ridiculous. So I think, "no problem, I'll just get 1,000 more points and then grab an N64 game as well". That was before I realized that Pokemon Snap is 1,000 points in itself. This puts me in an awkward spot. I have 500 points sitting around right now and would like to get The Lost Levels. To do so I need only 100 more points. I can only get a minimum of 1,000 at a time however, so I'd be left with 900 points at best. Unless I spend that on some crappy NeoGeo game, I'll be left with spare points forever! I'd much rather just buy the titles themselves, not bulk points that will hopefully even out in a purchase.

Several reasons, including kids

[alexhmit01 (104757)]

There are a couple of reasons for this. Most are mentioned elsewhere, so I'm not going into details.
1. Is the per-transaction fee with the merchants, they don't want to do a bunch of tiny transactions and eat fees.
2. Breakage, every point on used in the system is excess profit.
3. Increase spending - companies found that the majority of gift card receivers spent MORE than the card was for. Makes sense, if you get a gift card for $25, and decide between $20 and $30 items, your choice is "lose" $5 and get

The hot dog problem.

[Kaenneth (82978)]

Why do hot dogs come 10 to a pack, but the buns come 8 to a pack?

I always end up with leftover buns or dogs, forcing my to buy more, over and over!

It's a conspiracy!

http://www.straightdope.com/classics/a2_350.html [straightdope.com]

Re:

[Pluvius (734915)]

The PlayStation Store has a number of items for sale at $1, and it doesn't use a stupid points system. This might be because Sony actually cares about customer satisfaction more than a tiny profit, or at least wants to appear to.

Rob

Re:

[edwdig (47888)]

You do know that credit card companies charge a minimum fee for each transaction, right? Microsoft can't let people do micropayments of $1 with a credit card because the credit card companies will turn around and charge Microsoft MORE than $1 to cover that transaction.

The fees would be more like 30-40 cents. When I did a credit card processing system a few years ago, it was either .25 or .35 cents per transaction, plus ~2.5% of the transaction total. We also used Verisign's gateway, which meant naother 10 c

Re:

[Bryansix (761547)]

Actually merchant banks do not charge that much for transaction fees. They also let you choose a tradeoff between a set fee per transaction and a percentage of the transaction. So if you set your transaction charge at $1 the per charge percentage might be like .01% while setting it lower to $.25 per transaction would be like 2.5%. Nevermind that this is microsoft and they can do things to lower these expenses like 1) negotiate them lower, 2) run their own payment gateway, 3) open an entire merchant banking

Re:

[Ash-Fox (726320)]

The most important thing here is not about them allowing you to buy points in micro increments. The major problem I have is that 100 points DOES NOT EQUAL $1. That is the stupidest shit ever. Explain that Microsoft! Sersiously, what were you thinking?!

It is a trick to get you to buy more credits/points than you really need. By having credits/points you cannot use in your account, because you can never reach a zero balance without much difficulty, you have given them extra money. Now you know what they were

rebates

[Psychofreak (17440)]

At least you don't work in the recreational marine industry. ITT/Jabsco reports over 60% compliance with their rebates (sadly I have no reference other than several reps word) Garmin, Raymarine, and Dometic report similar values. Across all retail the value is around 10% or less.

Phil