Joystiq reports that an anonymous Microsoft tech-support employee has tipped that an Xbox 360 dashboard update due to drop before the end of the month will add PayPal support.
The significance of this is that it will enable users to pay for the Xbox LIVE service and other items online without submitting their credit card details to Microsoft. Of course, they'll need to submit their credit card,debit card or bank account details to PayPal. But it's an alternative means of payment that may do much to alleviate the fears of Xbox LIVE users following the fallout from the recent PlayStation Network security breach. It's also potentially to divert some of the burden from Microsoft in the event of an Xbox LIVE intrusion.
It's worth pointing out, though, that PayPal's services were disrupted by denial-of-service attacks organised by Anonymous (the group that's often, rightly or wrongly, associated with the PSN intrusion) late last year after PayPal froze the account of WikiLeaks.
It's believed that this rumoured update will also implement the new Xbox 360 disc format that will enable more storage space. Of course, all of this is purely speculation at this point in time.