I see two reasons for the Microsoft Points system.
The altruistic: Little Jimmy and Jenny are too young for a CC, the points system allows them to make their own purchasing decisions within the limits set by parents, pocket money, ability to bully and outright theft.
The business model: The points system is a cash up front model with the added benefit of any surplus being held by MS. Most here would I'm sure frown on any supplier who charged a pre-order before the date of shipment yet this is exactly the behaviour the buyer condones when purchasing MS points - MS take the money at the moment the points are purchased, it matters little to MS when the points are redeemed. The fact that points can only be purchased in fixed allotments has the added benefit, for MS, of allowing an official mechanisum by which they can habitually 'overcharge'. The monetary sums involved around the odd few hundred points may be trivial ( or not when multiplied by 1,000,000 users) but when full games are charged at retail prices around the £30 (4000 points) to £50 (6000 points) mark (my guesses) and these points are purchased days or weeks in advance, well, I think the business 'logic' is easy to see.