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Microsoft will be phasing out the Microsoft Points virtual currency system used on Xbox Live and Zune by the end of the year, according to a report this afternoon by Inside Mobile Apps, citing an anonymous source.

The company would instead base digital transactions on the currency wherever the purchase takes place, following the practices of Android, iOS and other online stores, according to the report.

Such a move would remove a degree of complexity for Xbox Live users and other Microsoft customers. To pay for a video in the Zune Marketplace on Xbox Live, for example, users currently need to first buy Microsoft points (if they don’t have a balance already) and then apply those to the transaction. In many cases the denominations for the points don’t match the price of the content, requiring users to pay for more points even if they don’t plan to use them right way.

In other words, good riddance, assuming the report is true. Microsoft declined to comment to the site, but we’re double-checking to see if the company has anything to say. Inside Mobile Apps says customers with Microsoft Points balances at the time of the switch will have them converted into equivalent local currency.

Microsoft is preparing for the preliminary release of the Windows Store app marketplace, set to debut with the Windows 8 beta next month, and early glimpses have shown it using regular currency, not Microsoft Points.

(Via TechMeme)

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