Sources are reporting to Inside Mobile Apps that Microsoft will be discontinuing use of its Microsoft Points currency system used by Xbox Live, Zune marketplace, and the Windows phone. A source with knowledge of the company’s decisions are saying that all mobile developers with publishing agreements are being told to plan for the conversion.

This will impact all three platforms where the point system is used although one of the biggest adjustments will be to the Xbox marketplace where some games and extras are denoted in only Microsoft Points. The Zune marketplace and the Windows phone denote purchases in both the point system and regional currency.

The source also reports that any remaining point balance at the time of conversion will be switched to local currency. Microsoft has slowly been introducing cash purchases to the system’s most used platform Xbox LIVE. Full games from Games on Demand are denoted in currency with the points system used mainly by XBLA and the Avatar marketplace.

The conversion will bring a universal system across all of Microsoft’s platforms and bring it more in line with the App Store and Android Market for mobile phones and PSN for online gaming. The system has often been criticized for the need to convert currency to points and the fact that you must purchase a minimum of 400 points ($5) even for a 80 point ($1) avatar shirt.

Source: Inside Mobile Apps via Gamasutra