4 ms·

Ahh, is this why all these tech giants use a non-money credit system for their stores and networks: Sony, Apple, Microsoft, Amazon(?), ... there must be many mo

Ahh, is this why all these tech giants use a non-money credit system for their stores and networks: Sony, Apple, Microsoft, Amazon(?), ... there must be many more.

jonny_eh 14y ago
I'm pretty sure all of those companies also take $'s for digital goods. Microsoft is the most famous for having a credit system, but you can still buy retail download games using $'s. AFAIK, the only reason these companies would use a credit system is so that people need to buy credits in bulk, reducing the hit received from processing credit card transactions.
danielkan 14y ago
I think most larger companies use non-money credit systems because it gets more lock-in and is slightly harder for many people to parse how much they are truly spending.
georgeecollins 14y ago
The reason why companies use points instead of $ is: 1) Easy to keep the price consistent world wide 2) There is a casino chip theory that you spend more money when it is abstracted. People spend more when they use their credit cards as opposed to cash, etc. 3) You can sell point cards at retailers to the unbanked. In the Xbox case this is important because a lot of your audience is kids.
- bobsoap 14y ago
  2) is on the spot. As soon as you introduce an abstract that is one step removed from money, people are more willing to gamble with that abstract. This is true for everything from credits to casino chips and from stock/shares to options and derivatives. Also, the word "willing", in this context, is actually an intended pun, since this happens on a subconscious level. There is a lot of literature on the topic; some pieces even establish a tie between that notion and the most recent banking crises and scandals. For example, stock options are not just one step removed from currency, but at least two or more. Interesting stuff indeed.
  - caf 14y ago
    I suspect that even applies to foreign hard currency that you're not familiar with.
- kalleboo 14y ago
  As for 3, Apple sell currency-denominated cards for the iTunes store without any problems.
dangrossman 14y ago
Money transmission means moving money from one person to another. If you could use your Xbox to send money to a friend who also has an Xbox, then Microsoft would need a money transmitter license. Selling products, services, or "credits" for products or services, is not money transmission and doesn't require any kind of financial license.
- cinquemb 14y ago
  So in the case of AirBnb, their service is helping people find places to stay?
  - dangrossman 14y ago
    Is all the money you pay to Airbnb for the service of helping you find a place to stay? Or is most of it being transmitted to the property owner after the end of your stay? Yes, it is; they are acting as a money transmitter. Money transmitters typically take some of the money; they're licensed businesses, not charities.
    - gburt 14y ago
      How is being a "money transmitter" any different than buying the "inventory" and reselling it? Airbnb could have an "expense" paying their providers. This seems crazy.
    - cinquemb 14y ago
      If Airbnb says that they are being paid for the service they provide, and part of that contract with their customer is to pay a property owner (like an Travel Agent), does that change things? Would a Travel Agent be called a money transmitter? As someone asking someone else who seems to know more about this than I, does this lawsuit have legs to stand on? [Edit: seemed to be answered here https://news.ycombinator.com/item?id=5677731 https://news.ycombinator.com/item?id=5677731]
      - dangrossman 14y ago

Ahh, is this why all these tech giants use a non-money credit system for their stores and networks: Sony, Apple, Microsoft, Amazon(?), ... there must be many more.

jonny_eh 14y ago

I'm pretty sure all of those companies also take $'s for digital goods. Microsoft is the most famous for having a credit system, but you can still buy retail download games using $'s. AFAIK, the only reason these companies would use a credit system is so that people need to buy credits in bulk, reducing the hit received from processing credit card transactions.

danielkan 14y ago

I think most larger companies use non-money credit systems because it gets more lock-in and is slightly harder for many people to parse how much they are truly spending.

georgeecollins 14y ago

The reason why companies use points instead of $ is: 1) Easy to keep the price consistent world wide 2) There is a casino chip theory that you spend more money when it is abstracted. People spend more when they use their credit cards as opposed to cash, etc. 3) You can sell point cards at retailers to the unbanked. In the Xbox case this is important because a lot of your audience is kids.

bobsoap 14y ago
2) is on the spot. As soon as you introduce an abstract that is one step removed from money, people are more willing to gamble with that abstract. This is true for everything from credits to casino chips and from stock/shares to options and derivatives. Also, the word "willing", in this context, is actually an intended pun, since this happens on a subconscious level. There is a lot of literature on the topic; some pieces even establish a tie between that notion and the most recent banking crises and scandals. For example, stock options are not just one step removed from currency, but at least two or more. Interesting stuff indeed.
- caf 14y ago
  I suspect that even applies to foreign hard currency that you're not familiar with.
kalleboo 14y ago
As for 3, Apple sell currency-denominated cards for the iTunes store without any problems.

dangrossman 14y ago

Money transmission means moving money from one person to another. If you could use your Xbox to send money to a friend who also has an Xbox, then Microsoft would need a money transmitter license. Selling products, services, or "credits" for products or services, is not money transmission and doesn't require any kind of financial license.

cinquemb 14y ago
So in the case of AirBnb, their service is helping people find places to stay?
- dangrossman 14y ago
  Is all the money you pay to Airbnb for the service of helping you find a place to stay? Or is most of it being transmitted to the property owner after the end of your stay? Yes, it is; they are acting as a money transmitter. Money transmitters typically take some of the money; they're licensed businesses, not charities.
  - gburt 14y ago
    How is being a "money transmitter" any different than buying the "inventory" and reselling it? Airbnb could have an "expense" paying their providers. This seems crazy.
  - cinquemb 14y ago
    If Airbnb says that they are being paid for the service they provide, and part of that contract with their customer is to pay a property owner (like an Travel Agent), does that change things? Would a Travel Agent be called a money transmitter? As someone asking someone else who seems to know more about this than I, does this lawsuit have legs to stand on? [Edit: seemed to be answered here https://news.ycombinator.com/item?id=5677731 https://news.ycombinator.com/item?id=5677731]
    - dangrossman 14y ago