The next Xbox 360 system update will spell the final doom of the Microsoft point. Chief product officer Marc Whitten laid out how the changes will happen in post on the Xbox Wire news blog.
First off, all current Microsoft Points will be converted to an equal or greater value of their local currency--including points earned through Xbox Live Rewards. All existing Microsoft Point Cards and codes will be accepted "until further notice" for their equivalent local value, and new local Xbox Gift Cards will start rolling out in late 2013.
Whitten did not say when Microsoft will release the update, but Xbox Live's Larry "Major Nelson" Hryb earlier wrote that the Microsoft Point will go the way of the dodo sometime in 2013.