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Please, why does everyone have to make up their own currency? I'm perfectly content with using dollars. Facebook Credits, Microsoft Points, etc... how do these

by geetee 14y ago

Please, why does everyone have to make up their own currency? I'm perfectly content with using dollars. Facebook Credits, Microsoft Points, etc... how do these do anything but confuse and corner the consumer? Edit: Yes, I realize you're still able to use credit cards. For now. :)

rogerbinns 14y ago
Off the top of my head: You get to make money on the float (money given, virtual currency not spent yet). You can let others sell them (eg the iTunes cards in stores) as the stores would otherwise have no incentive to sell or promote your points. You can avoid tax issues since the conversion of money into points is when it matters, not later on. You get user identity information so you can market at them. You can start offering other products (eg stickers and toys). You can get participation by people without credit cards. You can do micro transactions - credit card fees kill them normally.
- rplnt 14y ago
  > You can get participation by people without credit cards. I think this part is aimed at kids.
  - rogerbinns 14y ago
    A Gallup poll claims 7% of people in developing economies have credit cards and 50% in high income countries http://www.gallup.com/poll/154340/credit-cards-formal-loans-rare-developing-countries.aspx http://www.gallup.com/poll/154340/credit-cards-formal-loans-... According to creditcards.com (I can't tell how legit they are) 70% of US adults do have a credit card. There is a sizeable market of non-credit card holders. And yes, it also lets parents buy virtual currency for their kids too.
    - geetee 14y ago
      How are you buying Amazon Coins without a credit card? At the store with cash? Amazon already sells gift cards at retail locations.
      - rogerbinns 14y ago
        It is easier to purchase $20 worth of "coins" once than it is to make small dollar purchases in dribs and drabs over time as small transactions are needed (eg 40 transactions for 50c each). "coin" purchases can be done in any way that makes sense for a consumer including using credit cards, debit cards, bought at stores, gift cards, promotions from others (like how many places use airline miles) etc.
- geetee 14y ago
  All great points for how this benefits Amazon, but not the consumer. It just locks up your money in their ecosystem.
  - rogerbinns 14y ago
    Well for a start the system has to work this way to be practical. If there was a credit card transaction for every coin use then the minimums would have to be a lot higher in order to take into account processing fees. You can't sell something for 20c paid by credit card. Even a sale for $1 eats up a fair bit in processing fees. But converting $20 into "coins" then allows the coin based transactions to be for far smaller amounts (eg equivalent to 10c). Obviously Amazon and other virtual currency providers need to give you a good reason to get sucked in. They are largely successful. One approach that seems to work is paying to save time. eg when playing a game you can unlock various items and make progress just by playing the game for quite a while. Or you can do a transaction to accelerate that such as getting an item immediately or unlocking levels. Americans also have a tendency to prefer fixed known in advance costs over variable ones. Note for example how telephone service has been that way. If you buy $20 worth of coins then you know you can never spend more than $20. On the other hand if your credit card is on file and used in every transaction then you could end up being dinged for far more than you expected.
lucian1900 14y ago
While I agree that they're annoying, they solve the problem of local currencies. I don't have an intuitive grasp of how much a dollar is, nor do I want to.
- geetee 14y ago
  Sorry, I didn't mean to imply dollars specifically for everybody. Local currency can easily be displayed for everyone without made up coins.
  - lucian1900 14y ago
    It gets complicated if you don't always stay in the same country. What if you topped up £10, used £7.29 of it, then went to the US and topped up $10? Should your balance be £2.71 + $10? Which currency should be used when you buy things? How should conversion be done? I understand the motivation of wanting a separate currency.

by geetee 14y ago

rogerbinns 14y ago

Off the top of my head: You get to make money on the float (money given, virtual currency not spent yet). You can let others sell them (eg the iTunes cards in stores) as the stores would otherwise have no incentive to sell or promote your points. You can avoid tax issues since the conversion of money into points is when it matters, not later on. You get user identity information so you can market at them. You can start offering other products (eg stickers and toys). You can get participation by people without credit cards. You can do micro transactions - credit card fees kill them normally.

rplnt 14y ago
> You can get participation by people without credit cards. I think this part is aimed at kids.
- rogerbinns 14y ago
  A Gallup poll claims 7% of people in developing economies have credit cards and 50% in high income countries http://www.gallup.com/poll/154340/credit-cards-formal-loans-rare-developing-countries.aspx http://www.gallup.com/poll/154340/credit-cards-formal-loans-... According to creditcards.com (I can't tell how legit they are) 70% of US adults do have a credit card. There is a sizeable market of non-credit card holders. And yes, it also lets parents buy virtual currency for their kids too.
  - geetee 14y ago
    How are you buying Amazon Coins without a credit card? At the store with cash? Amazon already sells gift cards at retail locations.
    - rogerbinns 14y ago
      It is easier to purchase $20 worth of "coins" once than it is to make small dollar purchases in dribs and drabs over time as small transactions are needed (eg 40 transactions for 50c each). "coin" purchases can be done in any way that makes sense for a consumer including using credit cards, debit cards, bought at stores, gift cards, promotions from others (like how many places use airline miles) etc.
geetee 14y ago
All great points for how this benefits Amazon, but not the consumer. It just locks up your money in their ecosystem.
- rogerbinns 14y ago
  Well for a start the system has to work this way to be practical. If there was a credit card transaction for every coin use then the minimums would have to be a lot higher in order to take into account processing fees. You can't sell something for 20c paid by credit card. Even a sale for $1 eats up a fair bit in processing fees. But converting $20 into "coins" then allows the coin based transactions to be for far smaller amounts (eg equivalent to 10c). Obviously Amazon and other virtual currency providers need to give you a good reason to get sucked in. They are largely successful. One approach that seems to work is paying to save time. eg when playing a game you can unlock various items and make progress just by playing the game for quite a while. Or you can do a transaction to accelerate that such as getting an item immediately or unlocking levels. Americans also have a tendency to prefer fixed known in advance costs over variable ones. Note for example how telephone service has been that way. If you buy $20 worth of coins then you know you can never spend more than $20. On the other hand if your credit card is on file and used in every transaction then you could end up being dinged for far more than you expected.

lucian1900 14y ago

While I agree that they're annoying, they solve the problem of local currencies. I don't have an intuitive grasp of how much a dollar is, nor do I want to.

geetee 14y ago
Sorry, I didn't mean to imply dollars specifically for everybody. Local currency can easily be displayed for everyone without made up coins.
- lucian1900 14y ago
  It gets complicated if you don't always stay in the same country. What if you topped up £10, used £7.29 of it, then went to the US and topped up $10? Should your balance be £2.71 + $10? Which currency should be used when you buy things? How should conversion be done? I understand the motivation of wanting a separate currency.