The Verge is reporting that Microsoft’s virtual currency (Microsoft Points, Xbox Points, etc.) is on it’s death bed and will be replaced with gift cards and real currency. Microsoft has apparently acknowledged the disdain towards their virtual currency system and are taking steps to change it. The new system will remove the need to purchase points before being able to purchase content. This will be like taking the middle man out of the equation.
Naturally, Debit/Credit transactions will be the go to for this system, but they will also be introducing a new gift card system that will work across all of Microsoft’s marketplaces. This means that one of the new gift cards will work for Windows 8 apps, Zune/Xbox Music, Xbox games and content, TV shows, and (not sure about this but I hope so) Windows Phone apps. The gift cards will be in dollar amounts instead of the points system.
No word yet as to what will happen with the current points cards out there, but it would be safe to assume that there will be some type of conversion. You can expect this update to coincide with the launch of their next console this year.
Source: The Verge