In the U.S., Microsoft has announced that Xbox 360 gamers can use the electronic payments service, Paypal, to purchase Microsoft Points and content from the Xbox Live Marketplace.

Xbox guru, Major Nelson revealed the news on his blog:

You can use PayPal to buy Microsoft Points without having to associate your credit card information to your Xbox LIVE account. If you are new to PayPal, please sign up first and then follow the steps below to associate your account with Xbox LIVE.

It’s pretty easy and just like adding a credit card to your account. Sign in to Xbox.com and head to the account summary page. From there choose “Manage Payment Options” (from the left navigation menu) then click “Add a new PayPal Account.” Follow the instructions and you’ll be set up in no time.

A couple of things to point out:

PayPal is currently supported for Xbox LIVE users in the U.S. only.
PayPal can only be used to purchase Microsoft Points on Xbox.com.
PayPal accounts are not available for purchasing Microsoft Points on the Xbox 360 console.

You can associate multiple Pay Pal accounts with your Xbox LIVE account.

Being able to use the Paypal service will make transactions easier for many gamers, who will probably have set up PayPal accounts already for use on eBay. Don't forget the fees that you'll get charged though for the privilege of using the online bank!

It's currently unknown whether the service will cross over to the U.K.