Interesting the fee is non refundable.

PayPal (for example) take a random amount (of less than €1) from your card as proof of identity and then refund the same amount straight back to your card (here in France anyway). This procedure is fairly common.

I wonder why MS decided to keep it. Perhaps I can buy something from their store for $0.50 for my (one) child but presumably they are counting on people just not reclaiming it.

I don't begrudge $0.50 - it just seems a bit petty really.