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.

understandable but also inexcuseable

i think the difference is in not doing something because it's right vs. doing something because it's so small that 99% of people out there won't notice.

it's like mail-in rebates.... i've worked at a fortune 50 computer company, and the exact to the tenth of a penny cost of rebates have already been factored into every budget up through the supply chain.
they're so immutable as to never even be questioned.

Translation

"We make more money this way."

Re:Translation

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:Translation

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

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:Translation

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

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

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:That's just unfair.

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.

What a load of crap!

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:What a load of crap!

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

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.

100 friends is harcoded client side

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

Carnie System

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

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.

Change in Microsoft's pocket

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

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?

What I want to know

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...

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...

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...

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.

It's called breakage

... 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]

Also hides regional price variance

Which is a nice little side benefit.

If I look at the US itunes store, I can immediately see that I am paying about 50% more for music compared to the US, as the standard track price in AU is $1.69

If I look at the cost of items on Xbox Live AU compared to the US (I believe that) the point costs are the same.

I know it works this way with the Wii, and the AU price conversion for cash -> Wii points is $1.50 -> 100 and the US one is of course $1USD -> 100, and the japanese one is 100JPY -> 100.

And of course the AU dollar hasn't been below 0.75USD since the Wii was released, and has typically been in the high 80s. And it certainly hasn't been below 90JPY since the Wii was released, but more people who ever see another countries store will see the same point cost, and think "Oh, they are paying the same prices"

Sadly Similiar in Nintendo's Case...

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.

Why I don't like Microsoft's gaming approach

As others mentioned, this is crap. The point is to get the dollar amount out of your head, much like the carnival ticket example mentioned elsewhere.

It's even worse than the Wii's point system because MS points don't map to easily divisible dollar amounts. I believe 800 points equals $10, which isn't difficult math but certainly isn't as easy as they could've made it. Contrast that to the Wii, where a point equals a penny, which the aforementioned 800 points would be a much more quickly to see $8. Sony does one better and just has you pay in actual currency.

The whole system is set up to deceive the consumer

This isn't Microsoft's only (IMHO) deceitful money grab on the xbox 360. If you want rechargable controllers, that's an extra $20, making them $70 compared to $50 for a Sony Sixaxis (the stock controller for the system). Want wireless Internet? Extra $90-$100. Want to play online? Extra $50 per year.

Granted, Live's service is currently superior to Sony's, but I don't know if it is $50/year superior. You can argue the 360 controller is better out-of-the-box because it has rumble, but I'm just talking about the stock hardware that is currently available - it's not like Sony is excluding rumble from some sticks and not others to do some price differentiation. And I left out the extra cost on the 360 if you are interested in high-def movies - it's fine they left it optional but I think the HDDVD add-on is overpriced as well.

My main point is that at some point it becomes disingenuous to claim Microsoft is providing better or even similar value to its primary competitor.

Disclaimer: I own a PS3, xbox360, and a Wii.

The hot dog problem.

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]

Privacy sucks, too.

So, some joker typed in a made-up email address on his xbox live account.

I now get spammed regularly by microsoft, and their internal abuse mailbox is behind a filter that rejects all mail from me as "obscene". (Apparently this is moderately widespread; it's quite easy to be on a Class C shared with someone else who spammed them once, and they have no procedure for getting unblocked from Microsoft; Hotmail actually does, but Microsoft proper doesn't.) So I can't complain about the unwanted mailings...

Sheesh. Whoever it is, I hope he realizes Microsoft is happily sending his personal information to me regularly.

It's easy!

It's the same scam as hot dogs come in packages of ten, and buns in packages of eight.

PS3 doesn't do this

Simply put, Sony's PlayStation Network doesn't do this. The minimum is a $5.00 charge, but it's exact change above that.

1) You have a wallet.
2) If you don't have enough money in the wallet, and it will take less than $5.00 to cover, then you will be charged $5.00.
3) If the balance is $5.00 or greater, you will be charged exactly that amount.

You will always have less than $5.00 in your wallet, or most times $0.00 in your wallet as I have personally found.

If Sony can do this, why can't Microsoft?

minimum

If thats the reason then they should make a minimum transaction rather then tiers

No one even cares outside North America

From the original article:

With ever-more tempting content on Xbox Live

Yeah in any country except most of the world. The only place you can get decent content on Xbox Live is North America. Here in Japan, we can't even download Xbox Originals. Last night I tried to buy the original Halo (1,200 points). It's owned by Microsoft and published by Microsoft so there are no tricky third-party licensing issues. I can see it right there in the store tempting me. I can go through the ordering process. I can get to the download stage, and then when it says "Confirm download" I get a fucking pop-up saying "Sorry not available in your region". Thanks a fucking bunch Microsoft. I bought 2,000 points last night for nothing. No, I don't want a fucking 'theme' instead. Seriously, you don't even deserve to succeed in Japan.

Superman III

Didn't Richard Pryor think of this? (And later the folks at Office Space)

There is one advantage for the consumer

There is one advantage for the consumer... the price you pay for the point cards at retail isn't always a fixed amount. I bought $20 worth of points directly from MS using a CC through the Marketplace back when I first got a 360 two years ago. Since then, I've bought the cards at sales. Averaged out, I've paid about $1 a point instead of $1.20.

Re:Credit card

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:Credit card

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 cents per transaction. I'm sure Microsoft created their own gateway and doesn't need the middleman providing that service.

Re:Credit card

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 operations themselves which they could then sell to other businesses making a shitload a money in the process.

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?!

Re:Credit card

Actually, I know that credit cards do NOT require a minimum fee per transactions.

And if you are responsible with debt, you should always use a credit card for major purchases. Not only is it easy to track and an additional proof of purchase, I have relied on credit card companies to protect me when a company has tried to screw me. I once had a defective purchase of over $1000, and when I complained, the store told me they just filed for bankruptcy and won't take my product back. One call to my credit card company and I got the product for free.

It's like a union of consumers.

Also, that think you are talking about with "a minimum purchase to use a credit card" is actually illegal breach of contract with all credit card agreements I'm aware of. It's a scam to make you spend more out of guilt. The business has contracted that they must treat credit card users same as cash users. Trust me, that business needs Visa a hell of a lot more than Visa needs that business. And if you see a business doesn't accept credit cards, it's a sign that the business is going to try to screw you.

Credit cards are not evil themselves. There are plenty of practices, such as raising credit limits for poor people to trap them in debt, or variable interest rates, that are evil, but there is no reason to avoid using a credit card if you are responsible with it. In fact, it's kinda stupid not to.