Microsoft still wants to control your wallet


So Bill Gates, musing aloud during one of the sessions at the exclusive, celebrity-studded think-tank known as Davos, says Microsoft would like to get into the micro-payments game — maybe cut MasterCard and Visa out of a little action, elbow its way into the PayPal and Google Checkout business, that kind of thing. Pretty big news, right? Sure. Except for the fact that Microsoft has wanted to accomplish said goal for about the last decade or so.

Ever use Microsoft Passport (now Windows Live ID)? You sign in once with your Hotmail name and then get access to all sorts of wonderful places on the Web… that is, provided they are controlled by Microsoft. The plan to make Passport a universal ID card as well as a payment portal never really took off. Why? Because people don’t like to play with Microsoft unless they have to, that’s why. In fact, they would apparently rather get taken to the cleaners by MasterCard and Visa.


More recently, Microsoft has been establishing a “points”-based system of payment, both for Xbox Live features and possibly to compensate people for sharing music over the Zune network (assuming anyone ever does that, of course). Although he was irritatingly vague about what the company has in mind, Mr. Gates seemed to be suggesting that this points system could become a micro-payment scheme for the Web.

Let’s be frank. This has virtually zero chance of ever becoming a reality. Don’t get me wrong — I think micro-payments are a great idea, and they would help any number of fledgling Web-based businesses make a living, up to and including blogs. But there are two problems with a Microsoft points system: The first is the word “Microsoft,” and the second is the word “points.”

Points-based systems are much like the system used at casinos, or the payment card used at some restaurants — just confusing enough that you forget how much you are really spending. And the odds of Microsoft somehow convincing thousands or tens of thousands of small retailers and businesses to sign up for a Microsoft payment system? A billion to one.

Comments (8)

  1. engtech wrote::

    So true.

    This is one way Microsoft burned their bridges with their cut-throat business practices… you know that if there was a business advantage to them, they’d do something with the points system to steal business from you without a second thought.

    Monday, January 29, 2007 at 2:22 pm #
  2. CosmoReaxer wrote::

    Good thing you point out they *are* being taken to the cleaners. As I noted over at Ars Technica, Microsoft does have a good “in” because of what’s called interchange fees — that’s the flat fee plus percentage they charge merchants, and it’s a huge cash cow for the card issuing banks — more than late fees, overdrafts and all those combined.

    Click my name to follow the link to the coalition that’s been working to get interchange fee schedules brought to light. Visa/MC has kept them secret until now, which is suspect all by itself.

    Monday, January 29, 2007 at 2:28 pm #
  3. Gene wrote::

    “Because people don’t like to play with Microsoft unless they have to, that’s why. In fact, they would apparently rather get taken to the cleaners by MasterCard and Visa.”

    This is a really absurd statement. The average person on the street (and no, that doesn’t include the AAPL-cult members) doesn’t even give a second thought to Microsoft, in the “they’re evil and Jobs is a God” sense.

    If Microsoft develops the right partnerships and creates online templates that make using their points system as easy as 5 million Xbox LIVE subscribers now think it is, then it’ll take off — and Visa, Mastercard and PayPal are in big trouble; as is the iPod franchise.

    Gene from

    Monday, January 29, 2007 at 4:38 pm #
  4. Mathew Ingram wrote::

    It may in fact take off, Gene — my point was simply that Microsoft has been trying and failing to get a single Web passport/payment system going for years. There must be a reason why it hasn’t worked before now. And I’m not talking about the man on the street adopting Microsoft’s points as online currency — I’m talking about all the websites and services that would have to jump on the bandwagon before it would work. It works on Xbox because Microsoft controls it.

    Monday, January 29, 2007 at 4:54 pm #
  5. Gene wrote::

    Fair enough, and valid points, Mathew.

    Thanks for the reply (which is more than I do on my blog…which I’ve told everyone is a monologue, not a dialogue). It’s always nice to come across bloggers who have a more generous philosophy than I.


    Monday, January 29, 2007 at 5:30 pm #
  6. John Obeto wrote::

    In the first place, the points systems is working fine.

    Secondly, for far-flung vendors (in less-developed countries), micropayments removes barriers to trade since it disenfranchises the bureaux de change in those same countries that invariably devalue their (the vendor’s)returns.

    Microsoft, despite your assertion, has not been developing a micropayments system for the past decade. It was developing a federated identity authentication system. Period.

    Finally, you say no one wants to entrust their information/money to Microsoft. Are you kidding? Or just putting stuff to print in order to get a response?

    850 million or so users of Windows, in all forms, beg to disagree.

    Even if you come up with the absolutely insane notion that 50% of Windows users are sheep, the remaining 50% would still be about 91% of the PC market.

    Since we have hard numbers, just what is your point, Matt?

    Monday, January 29, 2007 at 11:41 pm #
  7. Mathew Ingram wrote::

    John, I’m not saying the points system isn’t working fine. I’m sure it is — for Microsoft-owned and controlled products. My point is whether it will succeed when the company tries to extend it beyond that.

    And while Passport started as an identity management system, the company has talked regularly and openly over the years about turning it into a payment scheme or adding a payment process onto it. That’s a fact.

    As for the 850 million Windows users, that’s a red herring and you know it. Those people bought a computer that had an operating system installed on it for them, and presumably if Microsoft could think of a way to make using Microsoft Points a default selection with the OS they would use that too.

    But I’m not talking about them, as I pointed out to your fellow Microsoft defender above. I’m talking about all the companies that would have to get on board to make the thing work with anything other than Microsoft-controlled services. You may have hard numbers, John, but you have a weak argument.

    Tuesday, January 30, 2007 at 12:22 am #
  8. Of course they do, who doesn't, hehehe ;))

    Sunday, February 8, 2009 at 12:12 pm #