It seems that the recent PSN episode has made Microsoft sit up and take notice. In a notice about the upcoming Spring Update for the Xbox 360, Microsoft has now allowed the use of Paypal as an alternative to a Credit Card.
Now Paypal at your service
In a statement on the website, Microsoft clearly states that users can now choose PayPal as an alternate mode of payment and that it can only be done through the Xbox.com website and the console itself. It also adds that the PayPal can only be used to used to buy Microsoft points and the multiple PayPal accounts can be associated with a Xbox Live Account.
The only downer to this news is that the option is currently only supported for Xbox Live users in the U.S. Apart from the PayPal mode of the payment; the new spring update will add support for the higher-capacity Xbox Game Disc Format (XGD3), which Microsoft says will be used for future games. The new media format also adds a new layer to copy protection in order to deter pirates from playing copied games on their consoles.
Users can expect the new update to be available from 19 May 2011, along with a Avatar Kinect app which will be available from the 27th of May.