Thursday, October 25, 2007

Extending Microsoft Money - The Web Needs an Alternative to Paypal

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

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?

We want a Paypal competitor

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?

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