Microsoft is working with Bitcoin merchant services provider BitPay to allow customers to seamlessly exchange the virtual currency when loading money into their Microsoft accounts.

"BitPay and the Bitcoin community have been working very hard to make bitcoin payments the most secure and easiest way for customers to purchase products and services both online and in person," said Tony Gallippi, co-founder and executive chairman at BitPay. "The acceptance of bitcoin by Microsoft further substantiates that the Bitcoin ecosystem is ready and open for business."

Microsoft accepts Bitcoin payments through its currency stored value product.

BitPay will exchange consumer's bitcoins at the current market value at the time so consumers can load the dollar equivalent into their Microsoft account for purchasing digital content on Xbox, Windows and Windows Phone platforms. Funds can be used to purchase items from stores that house Xbox Games, Xbox Video and Xbox Music, plus items in the Windows Store. The service is currently only available to U.S. consumers.

To use the service, consumers will select the amount of money they'd like to add to their Microsoft account. BitPay then calculates the equivalent amount of bitcoin and sends that information along with a BitPay Bitcoin address and payment instructions to the consumer. The consumer then pays the calculated amount from their preferred Bitcoin wallet to complete the transaction.

“The use of digital currencies such as bitcoin, while not yet mainstream, is growing beyond the early enthusiasts," said Eric Lockard, corporate vice president of Universal Store at Microsoft, in a Dec. 11 press release. "We expect this growth to continue and allowing people to use bitcoin to purchase our products and services now allows us to be at the front edge of that trend.”

While Microsoft isn't allowing the direct purchase of goods through Bitcoin, "this exchange provides an option to keep up with the changing needs of customers who are using micropayments and other banking alternatives," the company said in the release.

Many businesses don't directly accept bitcoins for payment. BitPay, Coinbase and a handful of other Bitcoin merchant services providers immediately exchange the Bitcoin a merchant receives into their preferred national currency. 

BitPay is used by more than 50,000 merchants, including Newegg and Tiger Direct.

The service also has transfer caps. Users cannot transfer more than $1,000 worth of bitcoin to their Microsoft account on any given day. And no more than $5,000 worth can be transferred to additional Microsoft accounts registered to the user.

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