In Windows Phone 7.x, you could make on-device purchases in Windows Phone Marketplace using credit/debit cards associated with your Microsoft account or, if supported, through your wireless carrier. In Windows Phone 8, these options have expanded to include PayPal and Microsoft gift cards, for apps and games only.

Microsoft lets you purchase music, apps, and games (but not TV shows or movies) on your Windows Phone 8 handset. You can also make in-app purchases, which is new to this release. But the payment options you get different between the content choices, as you’ll see.

When you find an item you wish to purchase in the renamed Windows Phone Store, simply tap the Buy button (for apps and games) or link (for music). The Windows Phone Store will display a Confirm Purchase screen, which varies a bit between apps/games and music. But the gist is the same: You can use the default payment method—via my AT&T account in my case—or switch to a different payment method.

For apps and games:

For music:

The options you get are also different for apps/games and music.

For apps and games, you can tap the Add or switch payment methods link and you’ll be presented with the Choose a Payment Method screen. Here, you’ll see your wireless account (when supported by your carrier), each of the credit cards that is associated with your Microsoft account, and PayPal, as well as an Add app bar button you can use to add a new payment method. This is all new to Windows Phone 8.

The Add button lets you add credit and debit cards, a Microsoft gift card, or a PayPal account. In the case of a Microsoft gift card, you’ll be prompted to type in the 25-digit code found on the card.

Music cannot be purchased using PayPal or a Microsoft gift card, so you’re stuck with the debit/credit card and wireless carrier account choices you had in Windows Phone 7.x.

To buy music, tap the Change payment method link. You’ll see a different display that includes a subset of the options available with app purchases: It includes your wireless account (when supported) and your associated credit and debit cards only.

The Add a credit card link, at the end of the list, shuffles you off to the mobile version of the Microsoft account site. You can only add credit and debit cards here, not a PayPal account or Microsoft gift card. (If you’re familiar with how app/game and music purchases worked on-device in Windows Phone 7.x, this is the same interface as before.)