Microsoft is carrying out plans announced at E3 to phase out Microsoft points and transition to real local currency. The change is effective immediately and is already reflected on the XBox Live Marketplace (except for certain in-game DLC, which still displays the cost in Microsoft points until you get to the purchase screen).

Any points currently stored on your account will be translated into the currency equivalent, as will any gift codes or point cards that would formerly have added Microsoft points to your balance.

The main difference going forward is that instead of adding an arbitrary number of points to your account and then purchasing items with those points, you’ll be able to directly purchase items with real money. Any currency added to your account as a result of surplus points or from other sources can be used in conjuction with a credit card to make a split payment, but you can’t use that currency to pay for a Gold account or transfer it between accounts. You also can’t withdraw currency associated with your account unless a situation arises where the law requires it.

Microsoft points have always been both a hassle and a duplicitous system designed to create distance in consumers’ minds between the purchases they make on XBox Live and the actual expenditures involved. We’re personally thrilled to see them go, if only because it means we’ll never have to do the 80 MSP = $1 song and dance again.