AI and BNPL Set to Fuel $253B Holiday Spending Surge Despite Economic Headwinds

Digital shopping carts are about to get heavier than ever before. American consumers are set to shell out $253.4B during this holiday season’s online shopping extravaganza, marking a 5.3% jump from last year’s spending spree. While inflation and potential tariffs squeeze household budgets tighter, shoppers are ensuring they stretch every dollar through AI tools, flexible payment plans, and discount hunting.

• Buy Now, Pay Later (BNPL) will account for $20.2B in holiday spending — up 11% YoY, doubling overall growth as cash-strapped shoppers embrace installments.
• AI shopping tools are exploding, with traffic from chat platforms projected to surge 520% YoY, spiking up to 1,000% during peak days like Thanksgiving.

Season of smart spending: Retailers are stepping up with new perks to keep the holiday momentum going. PayPalPYPL

is dangling 5% cash back on BNPL purchases through year-end, catering to the 60% of shoppers feeling heightened financial pressure. And with tariffs squeezing companies, Adobe’s Vivek Pandya believes, “All these retailers have to be able to drive up demand in this moment, so they’re going to be looking to try to offer competitive pricing in this promotional period at a very elevated rate.”