How U.S. Merchants Can Leverage PayPal Insights for Holiday Success in 2025

The Key to Holiday Shopping Success in 2025: Insights from PayPal's Survey

As the 2025 holiday season approaches, U.S. consumers are increasingly turning to technology to inform their purchasing decisions. A recent survey from PayPal highlights a crucial shift in consumer behavior that retailers must understand to capture sales and foster loyalty during this crucial time of year. With insights from the PayPal survey, merchants can adapt their strategies to align with consumer expectations, resulting in increased sales and stronger customer relationships.

The Rise of AI in Holiday Shopping

According to the survey, 40% of consumers indicate they have utilized artificial intelligence (AI) in their shopping experiences over the past year. This trend is particularly pronounced among younger shoppers, with 61% of Gen Z and 57% of Millennials reporting frequent use of AI to assist in purchases. Furthermore, the survey revealed 77% of AI users plan to adopt these technologies this holiday season to find the best deals, compare products, and search for gift ideas.

Merchants are urged to optimize their product visibility within AI-driven platforms, ensuring potential customers can easily discover their offerings. The integration of AI is transitioning from being a novelty to a mainstream shopping tool, and retailers must prioritize their presence within this digital landscape.

The Buy Now, Pay Later (BNPL) Revolution

Another significant trend identified in the PayPal survey is the increasing popularity of Buy Now, Pay Later (BNPL) options. Half of the consumers surveyed are planning to leverage BNPL during their holiday shopping to facilitate cash flow management. This flexible payment option allows shoppers to spread out costs while ensuring merchants enjoy a boost in conversion rates and average order values.

A staggering 52% of consumers expressed that they are more likely to complete a purchase if BNPL is offered during checkout. Specifically, younger generations are leading this charge, with one in four frequent BNPL users among Gen Z and Millennials. Merchants can significantly enhance their sales potential by promoting BNPL throughout the shopping journey, thus making it apparent at every touchpoint.

Embracing Omnichannel Retail Experiences

The survey also unveiled changes in shopping patterns, indicating a strong return of omnichannel retail. With 64% of shoppers choosing to shop in physical stores this holiday season, and 41% planning a hybrid approach that includes both online and in-person experiences, merchants must provide seamless interactions across all platforms.

This imperative connectivity extends to loyalty programs; 74% of Americans are more inclined to shop with businesses that offer cash-back or reward incentives. Success this holiday season will not merely stem from convenience but rather from the quality of connections merchants forge with their customers.

PayPal is responding to these insights by enhancing their offerings, including expanding their Pay Monthly option across in-store purchases nationwide. Additionally, for the holiday season, shoppers can earn 5% cash back on all PayPal BNPL transactions—both online and in physical stores—reinforcing the motivation for consumers to choose BNPL.

Company Commitment to Retail Success

Michelle Gill, General Manager of Small Business and Financial Services at PayPal, asserts that merchants must adapt their strategies to create a unified and streamlined shopping experience. By aligning themselves with advancements in AI and adopting flexible payment options like BNPL, retailers can not only thrive this holiday season but also build loyal customer bases moving forward. As the landscape continues to evolve, the need for merchants to enhance visibility and provide meaningful experiences at every touchpoint will be paramount.

The PayPal holiday shopping survey underscores the importance of recognizing these trends and responding proactively to cater to evolving consumer expectations. Merchants who prioritize effective engagement through technology and payment flexibility will be best positioned to succeed in the competitive holiday retail environment of 2025.