05
Feb
2013-02-05_15h47_23

The scene: a board room. Ominous and shrouded in mystery, all that can be seen is a long, black glass desk and on either side, twelve featureless chairs. In each sits a grumpy old person. The rest of the chamber is a dark, empty void. Out of the abyss a lone man appears, approaching the head of the table. He's adorned in blue jeans, a white dress shirt and a dark blazer. The brightest light in the room is the reflection on his head.

"Ladies and gentlemen," he says. "As you are no doubt aware, our earnings for last quarter were less than optimal. Both our revenue and profits have declined. We've spent considerable effort on locking as much content into our own ecosystem as we can in order to sell loss-leading hardware but, shockingly, this hasn't made us money. We need ideas. What can we do?"

The grumpy old people shift uncomfortably in their seats. After a silence that feels like it lasted for hours, one meek exec speaks up. "We... we could suddenly and irrationally create a virtual currency system to replace the perfectly functional actual money we use now in a shallow attempt to confuse users on the prices of things they buy and generally be more obnoxious under the guise of providing 'options' to customers."

"I love it," says Jeff Bezos.

Seriously, Why Would You Create Virtual Currency?

2013-02-05_15h37_52

Dramatization aside, yes, Amazon really is going to launch this product called 'Amazon Coins' for the Kindle Fire and related products. You can feel free to think of it like Microsoft Points or Nintendo Points or any of the other points that various different content providers use, because it's exactly like that. And it's just as obnoxious as those programs, which we'll get to in a second. The bigger question, though, is why would Amazon feel the need to do this? It already accepts money from virtually every possible method.

"Yes, but what about kids/moderated spending/people who don't have credit cards/etc?" you ask. Hate to disappoint, but Amazon's got that covered, too! Gift cards are available in every major market where the Kindle Fire is available. If you want to add a certain amount of money to your account and spend that and no more, you can already do that.

So, why do it? What is to be gained from creating a fake currency to mask the real one your business already uses? Simple. More money.

Virtual Currencies Are All Scams

2013-02-05_15h45_40

To be honest, there are very rare situations where virtual currencies are not designed to rip people off. Going all the way back to tokens in arcades, exchanging metal slugs with no monetary value for dollar bills was a slick way of ensuring that if money wasn't spent within the walls of the gaming gallery, it wasn't spent anywhere. Sure you could accomplish the exact same task with quarters (something that eventually became standard), but then you run the risk of a kid putting $1 in your machine but only giving you $0.50 worth of business! Tragedy!

Still, arcades got away with it because the real trick to getting money out of people was the addicting nature of "Insert Coin to Continue." In the grand scheme, token machines caused a negligible amount of wallet damage. Point systems were more insidious, however, because they function exactly like gift cards, except they require an extra conversion step in order to fully grasp the true cost of an item.

Take Microsoft Points as an example. Common denominations of MS points are 400 ($5), 800 ($10), 1200 ($15), and 1600 ($20). However, not everything on the various stores cost intervals of $5. The Zune marketplace, for example, might allow you to buy a song for 79 points (or about $1). Or a movie rental might cost 320 points (or $4). In other words, it is very unlikely that you would be able to buy a set number of points just for a single purchase. If you want to buy a $1 song, you have to spend $5 and hope you want to spend the other four later on.

The end result is, inevitably, some people will spend money on points they never use or forget they have. There may even be people who buy things they might not otherwise purchase because, despite being perfectly equal, 79 points feels cheaper than 99 cents. It's the same psychological games that result in things that cost 99 cents to begin with. Subtle tricks to make you believe you're paying less than you are.

Ironically, Microsoft is very slowly moving away from the points-based system, at least on Windows 8. While the currency remain on the Xbox, the exact same storefronts are being represented differently on separate platforms. It would not be surprising for the company to rectify this dissonance.

There Must Be A Better Way To Make Money

amazon_bezos_kindles_another-11404295

Amazon has a problem on its hands, unfortunately. The company's main business model of selling stuff online has served it well by allowing the company to undercut traditional retailers by saving on overhead. Unfortunately, undercutting the competition doesn't work in all areas. Most notably in sales of devices like the Kindle Fire. While the e-commerce giant has gained a sizeable amount of marketshare in the Android tablet space, that success come at the expense of profits. The Kindle Fire line is explicitly a loss-leader. It's a device sold at or below cost in order to push content sales.

Therein lies the rub. Part of Amazon's appeal on its most popular content distribution hub, Kindle, is its ubiquity. Hell, they even give a name to the awesome feature that keeps you on the same page no matter what device you're reading on: Whispersync. This puts the company in an uncomfortable position: the best way to increase content sales is to dismantle one of the key reasons you'd want to buy a Kindle Fire in the first place.

Ask any knowledgeable friend whether you should get a Nexus 7 or a Kindle Fire HD. The conversation will inevitably come to the following conclusion: "If you want a generic tablet, go Nexus 7. If you really love the Amazon ecosystem or have a Prime subscription, the Kindle Fire might be better." Why? Because literally the only benefit the non-Android Android tablet has is Amazon.

That being said, some people like the Kindle Fire. People have their preferences and they're never wrong per se. There is always room for competition. The trouble is, Google can subsidize its lack of profits on the N7 with its booming advertising business. Amazon cannot. It needs a revenue stream to make this work and, as the last two quarterly earnings reports have indicated, that's not going so well. Last quarter it only made $97m, down from $177m the year before. And that included Christmas. The quarter before that, the company lost $274m. $169m of that was due to exceptional investment costs, which means that even if it hadn't spent that money, it still would've lost over a hundred million dollars. That's not a good place to be in.

To an extent, this race to the bottom was inevitable. Apple very explicitly makes its money on hardware and, as such, can't reach certain price points other companies can. Hence the $330 iPad Mini. That's alright. Different business models can co-exist. However, if a tablet maker wants to undercut the competition and deliver hardware at bargain bin prices, it needs alternative revenue. Content is one great way to accomplish that.

Virtual currencies, however, are not. Amazon Coins reeks of desperation. While a few may defend the practice, and there may even be rare exceptions where someone prefers this virtual currency, at the end of the day the collateral damage to consumers just doesn't justify the benefit. It just feels like Amazon is trying to eek out extra profit from a business that has not been kind to it recently.

Eric Ravenscraft
Eric is a snarky technophile with a taste for the unusual. When he's not obsessing about Android, you can usually find him obsessing about movies, psychology, or the perfect energy drink. Eric weaves his own special blend of snark, satire, and comedy into all his articles.

  • Samuel Hart

    Thank you for this, spot on!

  • marcusmaximus04

    LONG LIVE BITCOIN!

    • defred34

      watsabitcoins? (said in the voice of smeagol)

      • http://twitter.com/Tuxavant Tuxavant

        Bitcoin is a digital currency and peer-to-peer payment network. It is not owned by any corporation, organization, or government. Most of the software to maintain your bitcoins (a wallet) is free or open source. There are no fees to setup an account or send money. It handles micropayments or massive payments to any location on earth, across any geo-political border, instantly. Learn more at WeUseCoins dot com

  • FrillArtist

    Microsoft Points is the main reason I have stopped buying from the Xbox Live market. Halo 4 DLC can go f itself. Unless it is DLC that I really, really desperately want, I no longer buy MScam points. The thing that annoys me is that when you have 700 points and you need 100 more, you are forced to buy more points than needed. Cheap dirty tricks.

    • http://www.androidpolice.com/author/eric-ravenscraft/ Eric Ravenscraft

      This is exactly why the currency schemes are scams. If you could buy them in any denomination, it might not be so bad, but then that defeats the point. Why bother having your own currency if it's just going to be a stand-in for a regular one? The reason is, that lack of flexibility is the point.

      Honestly, it kind of saddens me that Amazon has chosen to go this route. I don't think the company is going to disappear or "this is the beginning of the end", but man if I wanted to write a sensational piece like that, I'd be all over this story.

      • FrillArtist

        I agree on buying how many points you want to. It makes a lot of sense. Once, I had 80 points and i was like "whatever I'll just get a new theme or something". ALL the themes I wanted were 100 or 150 points but instead of just buying an additional 20 or 70 points I would be forced to buy 400 points.

        • AgustinRodriguez

          If 100 points is all you need, you can sign up for bing rewards. You earn 1 point for every 2 searches you do up to 15 points. In about 8 days, you can earn 100 Microsoft points. The only way I get xbox live points is through here. I've bought one 1600 point card. You don't get my money anymore Microsoft.

          • squiddy20

            They might not get your money, but they still make money off of you via Bing searches...

      • infogulch

        This, and now they can then refund you with points instead of the cash you spent, forcing all cash that comes into amazon to stay there and never leave even with returns.

        • Robert Alex Kibler

          I believe most vendors refund money in the same manner that you spent it. So, if I pay with a credit card, they refund to my credit card. If it's cash, it's cash, etc. I don't know if that's a law or just a general standard though.

          • defred34

            From where I come, if I spent $24 buying a good from Careffour (it's a supermarket chain) and it turns out to be defective, the guys will give me a cash voucher for their outlet. So you HAVE to re-spend it there. Never liked this and the guy above raises a valid point. How I wish they just gave me back cash.

      • http://twitter.com/sam1am John Samuel αΩ

        It's also clear to see with MS points that they are designed to make you think you are paying less than you actually are. 1000 Points seems like it would be about $10, but it's actually $12.50. The whole thing is about grabbing a few extra bucks on each purchase.

        I'm pretty disappointed that they are choosing to go this route. My Amazon stock is also pretty disappointed. :(

    • GazaIan

      As much as that sucks, how much more different is that from using regular currency? The PlayStation Store doesn't use any sort of their own currency, but if you need to add extra funds then the minimum you can add is $5. So if you only need one more penny, too bad, go spend the extra $4.99 elsewhere. I don't hate Virtual currencies, just the really retarded and confusing ones like Microsoft points that require a a calculator if you aren't math savvy. Nintendo points are fine, just drop in the decimal and that's how many dollars or euros is worth. The rip off may be from country to country where the price may be 2000 points for a game, paid for in the US with 20 dollars, but paid for in another country with 20 euros, or 20 pounds, which are worth way more than the US one but guess what; that same rip off exists even if you pay regular currency. As far as online retail shops for downloadables like the PS Store, Windows Store (this may be an exception), or the Nintendo eShop,all which globally use the currency of whatever country they're in, chances are the prices aren't even fixed to the same value across the countries. Ripoffs galore.

      The real solution here; buy shit from Amazon. Maybe even GameStop, since they actually turned out useful for once, but usually Amazon. Got Battlefield 3 Limited edition for 9 dollars. Black Ops for 12 dollars. Meanwhile it's still $59.99 on the online stores, and Microsoft fucks it up even more with Microsoft Points. Luckily they're getting rid of them slowly.

      • http://www.facebook.com/rob.watkins.7 Rob Watkins

        I don't agree with the part of the Playstation store.
        I only add as much as I need when making a purchase. You can add any amount, not just $5 minimum. I buy things for $0.99 every now and then when games drop in price.
        However, I never just add money for the sake of adding money. When I want something, I add it to my cart and buy it that way. I don't think that I've ever had any money just sitting on my account.

    • defred34

      "The thing that annoys me is that when you have 700 points and you need 100 more, you are forced to buy more points than needed."

      I get your point and agree with it, but then again isn't this the same case with gift cards (iTunes, Google Play etc)? You may just need $0.10 to buy a game, but need to buy a $10 gift card to accomplish that.

      • FrillArtist

        VERY, VERY, VERY few games are priced at 10 cents. The only time I've seen a 10 cent game was during a Google sale a while back. Most things are priced at a dollar (99 cents). If I buy a $10 gift card. I'm assured of 10 games at the minimum. Most stuff are priced in a way that you can easily use up the gift card.

        Besides, if you choose not to use gift cards. You can use a credit card or debit card or carrier billing or probably another payment option I'm forgetting. On Xbox Live, there is no alternative option. It's MScam points or bust.

        • defred34

          What I meant is you have say $0.89 balance and need $0.10 more cents. And as a correction, NO games cost $0.10 on Google Play!

      • didibus

        I'm not sure how Google Play gift cards work, but all the gift cards I've used before are used as rebates to your purchase. So if I buy a 5$ item and have 3$ on my gift card, I can pay 3$ from my gift card and pay the rest in cash or with my credit card.

  • zzz

    Nicely put!

  • RedPandaAlex

    I just don't understand what these virtual currencies offer that just gift cards/credit do for you. I mean, I still have 30 bucks off a google play gift card to use that accomplishes the same thing. Maybe it's more fun because it's coins?

  • Detonation

    The ONLY good side I've found about these systems is that sometimes you can buy the currency at a discount. MS points are, for example, always $20 for 1600, but often times you can use coupons and promotions to reduce to that price. You're still limiting your money to one market, but at least you're getting a better conversion rate. Stack that with when Xbox live has a sale, and you can basically double your savings.

    • http://www.androidpolice.com/author/eric-ravenscraft/ Eric Ravenscraft

      While that's true, there's nothing stopping the companies behind point systems from also having sales on regular-currency gift cards. Apple does this with iTunes with some regularity. I worked at an electronics store for a year or so and multiple times we had sales on $15, $25, or $50 gift cards for 20% off or something. It was essentially free money. No reason Microsoft or Amazon couldn't do the same thing with regular gift cards instead of points.

      • faceless128

        laws are different for gift cards and virtual currency.

  • George Fayad

    One of the many reasons I am an avid Steam user on my PC. It remains real currency.

  • Tomek Mleko

    Eric, great post but:

    1. platform-wide currency - one of the biggest benefits for customers here would be, if I get Amazon's press release right, is that Coins would become a common currency for all games and apps on Amazon App store. Which is great for both players and developers. If I buy a $5 pack of coins, I will be able to spend it in 10 games buying stuff, far better than buying 10 $0.99 coin packs (minimum price on Google Play) from 10 different devs.

    2. "virtual currencies are all scams" - well, it's difficult to discuss, it's such a generalisation :) The same way one could say buying a whole loaf of bread smells like scam as the whole loaf rarely gets eaten before going stale and yet you cannot buy 5/8 of a loaf... And there are tons of games on Google Play with virtual currencies, players enjoy them and devs make good money, usually more than with the premium model. What's wrong with that?

    It's not all black with these F2P models :)

    • http://www.androidpolice.com/author/eric-ravenscraft/ Eric Ravenscraft

      If bread were sold by the truckload, I'd agree. But a.) loaves do come in different sizes, 2.) there are technical limitations to packaging bread by the slice where there are none for currency, and d.) a typical loaf of bread is something that is easily consumed before it goes bad. Happens all the time.

      Also, the platform-wide currency doesn't actually work. We have those now with regular money. The transition to in-game currency would (or at least could) happen no matter what. Devs create gems or coins or gold or mana or lives or whatever to keep you buying more stuff. Amazon can't ban the practice, so no, there's really no way to effectively create a platform-wide currency for IAP that would be any better than the current system.

      • Tomek Mleko

        "platform-wide currency doesn't actually work"

        Amazon is well-known for making payment processes super-smooth (like 1-click payment) and that's what I think they want to achieve with Coins. I bet dollars against nuts they will succeed. And Amazon doesn't want to ban anything, the way I see it is they want to tap into existing revenue stream by offering better payment process with less friction. If Amazon would help devs to increase conversion by, say, 10% they will happily adopt Coins. It's all about conversion, if Amazon publishes a case study with a well-known developer showcasing Coins as a road to better conversion, higher ARPU, whatever, others will follow.
        Look at this from a player perspective - I'm buying Coins from Amazon, it's easy, I trust them. Once I bought them I can spend them on games that implemented this payment. Win for players, win for devs, win for Amazon. Especially if Amazon throws a tone of free Coins to educate players on how to use them.

        • John

          It seems to me that you would use the coins instead of cash to buy the in game currency. Each game can still have its own currency it will just accept coins to purchase it. It is adding another layer of fake currency to the process.

          • Tomek Mleko

            John, I think it has to be clarified, right now the system on Amazon / Google Play is:
            Purchase $0.99 worth of gems/points/gold with Developer A (card payment) -> spend it in Dev A's game(s)
            Purchase $0.99 worth of gems/points/gold with Developer B (card payment) -> spend it in Dev B's game(s)

            How this would work with Amazon Coins:
            Purchase $0.99 worth of Coins from Amazon -> spend 50 coins in Dev A's game(s), spend 75 coins in Dev B's game(s), etc.

            And yes, of course, each game could stil use their own currency.

            "For you, it's another opportunity to drive traffic, downloads, and increased monetization." - from Amazon's email. It looks like they are on the right track to achieve this.

      • Freak4Dell

        To be fair, the coin packages also come in different sizes. Restrictions may not be technical, but rather, financial. Amazon has to pay money to Visa, MasterCard, etc. in order to accept cards, and the fees add up to more with multiple smaller purchases vs. one large purchase. Also, coins (presumably) do not expire, so barring an extreme circumstance like the death of the user, they will be spent before they go bad...every time.

        I agree with the gist of the article, though, at least from a consumer standpoint. It's bad for consumers. However, from a business standpoint, it's genius. They don't stand to lose much at all from implementing this. If nobody buys it, there's no big loss. Chances are, though, that somebody will buy it. Consumers are generally stupid, and they buy stupid things like this. I have no problem with Amazon making money off of stupid people. After all, Apple has been doing it for years. :p

        • http://www.androidpolice.com/author/eric-ravenscraft/ Eric Ravenscraft

          I absolutely agree that it's brilliant from a business standpoint. But it's only genius in so far as it relies on consumers to make sub-optimal personal decisions. The real best business deals are those that allow both the company and the customer to benefit. This, however, is just plain ripping people off.

      • http://www.facebook.com/rob.watkins.7 Rob Watkins

        I like your response setup. You responded with a), 2), then d).
        Well played sir.

        • http://www.androidpolice.com/author/eric-ravenscraft/ Eric Ravenscraft

          Why thank you. :)

  • http://www.facebook.com/Icuii Keith Earns

    I lost when you said the dollar was perfectly functional.

  • DiscoStu

    Unless it is bitcoin it is useless.

    • http://twitter.com/Tuxavant Tuxavant

      I can't wait for more companies to get on board with Bitcoin.

  • http://profiles.google.com/pastorvor Brian Covey

    Credit card companies charge PER TRANSACTION. That makes CC billing quite costly for micro transactions. This seems to be a method of avoiding those fees.
    That said... There should ALWAYS be a cash equivalent for all proprietary currency. In other words, I should always be able to cash out my "coins" no matter how many I have or how I got them.
    You know, Google has "coins" as well. They are called credits. They do NOT work like cash. They say you get $25 worth of credits but they are only usable at Google. You cannot cash them out. So, they are exactly the same as these Amazon coins.

    This can easily be fixed by passing a law that says all virtual currency must be able to be cashed out.

    • faceless128

      its the same everywhere. same with Apple, Sony, etc... it's the same value as cash as far as numbers go, but what can you do with it? you can't spend it elsewhere, doesn't matter if its 2500 amazon coins or $25 in itunes or psn money or 2000 microsoft points. they all want one thing, to not get hit with huge CC transaction fees on tiny purchases.

    • http://www.androidpolice.com/author/eric-ravenscraft/ Eric Ravenscraft

      I don't care if currency can't be cashed out. There are use cases for that. Also, as a consumer, I don't care if it costs Amazon more money to charge per transaction. That may drive costs up for me, but that's part of the business. However, I will lose far more money if I am required to spend a minimum of $5 to buy a $1 item. I will happily take the per-transaction credit card fee for that.

    • didibus

      I agree, this digital currency should allow you to cash back on the money. Though I feel exchange rates would make it hard to manage.

  • Freak4Dell

    Stop giving away Cs to those cheerleaders.

    "Different business models an co-exist."

    • http://www.androidpolice.com/author/eric-ravenscraft/ Eric Ravenscraft

      This may be my favorite correction I've ever received. Thank you. Both for the tip and making me chuckle.

  • faceless128

    i love Microsoft points. they go on sale pretty often, they have tons of giveaways and points promotions... there's no ambiguous tax on purchases... unlike 'real money' cards on the PSN where you end up dealing with all sorts of issues and almost no sales or giveaways.

    i can do simple math, sucks for people that can't, but surely there's an app for that...

  • Cuvis

    Amazon did a great thing by driving tablet adoption with the original Kindle Fire. But with that said, they're no longer leading the pack in that area, and if they're having to resort to silly gimmicks like this to make the devices turn a profit, perhaps the best option is to drop the Kindle Fire line altogether and just make all their services platform-agnostic.

  • Evan

    I have a counter point. I live in Australia, and often when I'm buying online I encounter the exchange rate problem. More often than not prices are in American dollars, Pounds or Euro. Some good websites have the option to switch between currencies once you're in the website. But it really screws you over when you're, for example, following a Great Deal link from android police and the AUD$ price isn't the same... or the

    It would be nice to have a standard currency, which is not always fluctuating just for quickly comparing the competition without having to make calculations.

  • Matthew Fry

    Virtual currency is almost as bad as IAP and DLC

  • Vandré Brunazo

    Eric Ravenscraft, you are completely missing the point. This is to allow us, developers, to use smaller micro-payments. Because of transaction fees on credit cards, we cannot sell things for less than about $1. If I want to sell you something for 10 cents, I cannot, because the credit card fee would make it not worth it. I would need to build my own coin system. Which sucks for you, because if you don't wanna spend more than 10 cents, you'll still have to buy $1 worth of coins, which you cannot reuse on other apps. But with amazon coins, you'll be able to buy 10 cents from my app then another 10 cents from other apps. This is a huge benefit for both developers and users.

    Don't hate what you don't understand ;)

    • http://twitter.com/aosmitty andy smith

      Thank you. The transaction fee angle is pretty obvious (in my opinion) and probably why the "micropayment revolution" never got off the ground. If credit card companies are going to charge a set amount PLUS a percentage per transaction, you could easily end up paying more for the transaction than you paid for the good/service.

    • Matthew O’Leary

      Micro-micro transactions (nano transactions?) like this will be even worse on an app store than the current micro-transactions. Developers should have an option to 'pay in full' when offering their apps, because IAPs are a great way to anger and turn off many users to ever using that app again.

      • Tomek Mleko

        "because IAPs are a great way to anger and turn off many users to ever using that app again." yes, and $500k a day from Clash of Clans comes from all those angry players...

  • sonicdsl

    Not to be grammar police or anything, but thought I'd help out by pointing this out: "eek out extra profit from a business that has not been kind to it recently." "Eek" should be "eke", in this context. Unless you really meant they were scaring extra profit. :)

  • Wayne Randall

    I hope this is the nail in the coffin and buries the service. I stopped using Amazon for apps over a year ago, and this solidifies me never coming back. M$ doesn't get my money, err points, either. You can take my USD as I see fit, not the other way 'round.

  • defred34

    "...despite being perfectly equal, 79 points feels cheaper than 99 cents." Never felt like that before. Just saying. Otherwise, I like the no-holds barred nature of the article. Perfectly articulated it is, with coherent reasoning. But the fatcats need more money, and they'll use every trick in the book to squeeze every last drip of shit out of our body.

  • TylerChappell

    As much as I have bought from Amazon in the past 1.5yrs as a college student, it makes me sad to see their revenues/profits down so much. But Amazon is my go-to source for nearly everything I buy. Hell, I just bought a 10ft microUSB cable off there for my brother and it was only $2 so I also bought the 6ft AmazonBasics one for $5.79 just so it wouldn't be one of those micro transactions (and because the 10ft one is more likely to go bad).
    I wish they didn't have to resort to this coin system, but if it helps them than I am not opposed to it because no other company has provided me with better service in the past 1.5yrs than Amazon, and then there's the fact that I won't be buying these coins myself anyway.
    It took me about 5 months to use the $25 Play Store credit that came with my first Nexus 7, and I had spent exactly $25 even on various apps and games, and so I am fine with the idea of Google Play Store credit because I know I will always use every last cent.
    Same goes for the Steam Wallet, I got a $20 Steam credit for xmas and I ended up spending more than $20, thereby using all of it.
    I too can see how it is a scam when you have to spend more money than you originally intend to spend, but I think most users end up spending that money later on eventually anyway, especially if it's under $10. Sure, you may buy $5 worth just so you can spend $1, and you may not spend the remaining $4 until a year later, but at least it doesn't expire, then it would truly be a scam.

  • ./nl

    You're conflating revenue and profit. Amazon's -revenue- (aka the money that they brought in) went up in 2012 to $61 billion from $42 billion in 2011. Amazon's focus is (still) growth and expansion, and so they push pretty much all their money back into the business and intentionally keep their margins insanely tight. As such, their profit numbers are fairly low, but as a company they're not chasing profit. They also went from $5.2 billion cash on hand to just over $8 billion.

    The amount of money you're writing about them having lost represents about 0.4% of their total revenue. I'd call a year over year revenue growth of 45% nothing to sneeze at.

  • Woodson Hansell

    Probably mentioned, the company has the use of your cash. Gift certificates are the same. I heard that only 30% of gift certicate. for phone company were ever cashed in. Pretty good profit margin. The money in coins and gift cert. Are like a free loan. When dealing with amazons numbers this could be millions of dollars.
    Years ago I was looking at buying music through Microsoft. i tried to find out the cost of points for their music without sighning up. I dont remember if i figured it out, but it was one of the reason i didnt buy an xbox.
    One way amazon might go, to get your cash is a big discount for buying points. If i were going to buy something maybe I would use points with a big discount. But I would cash in immediately. But if I were required to use points for purchase from my kindle I would use web instead.
    Woody

  • Joe B

    Maybe Amazon Coins aren't perfect, but I do think Amazon is in an excellent position to produce a viable virtual currency.

    If I could use Amazon coins as a currency outside of Amazon, that would be great. Bitcoin is wonderful because it allows the middle man to be cut out or reduced. But a Bitcoin isn't inherently redeemable for anything if the system goes awry. If I could pay Amazon Coins as I do Paypal credits without transaction fees, I could pay for lots of things with Amazon Coins. Or my tenants could pay rent with Amazon Coins and I could sell them/convert them to dollars at a minimal expense (say 1% v 3%).

    And, at the end of the day, they would be backed up by products on Amazon. Sounds like there is a potential for an Amazon virtual currency that actually has something behind it. Amazon could print them like gang-busters, but that wouldn't make sense since they are redeemable at Amazon...

  • Alfred Marquez

    Not sure if this is relevant or not but thought I'd share anyway... Recently, I checked my credit card account and noticed that I was being a charged $630 (7 X $90) over a week-long period and the charges read "Amazon Coins". When I contacted Amazon, they quickly realized that my Amazon account had been hacked and said they would refund the full amount. A few days later, I checked and noticed they had NOT refunded the $630 as promised, so I called them again and they apologized saying my refund would be coming soon. I'll spare you all the back-and-forth that went on for over a week and cut to chase. After promising a full refund on 2 occasions, they reneged and said there was nothing they could do and that I should contact my credit card company for a quicker refund. WTF? Why didn't these morons tell me that from the get go? Anyways, I contacted my credit card company and the charges were immediately reversed. But there is definitely a serious flaw in Amazon's cyber security system and their customer relations department. Their handling of my complaint was an epic fail. Nuff said.

Quantcast