As the holiday season approaches, small business owners need to take advantage of new tools and methods to capture consumer attention and maximize sales. According to PayPal’s recent 2025 Holiday Shopping Survey, shoppers are increasingly choosing artificial intelligence (AI) and flexible payment options like Buy Now, Pay Later (BNPL) to enhance their shopping experience. The findings present both opportunities and challenges for small businesses aiming for success this holiday season.
A PayPal survey found that 40% of U.S. consumers have used AI for shopping in the past year, and 77% intend to use AI tools again this holiday season. This trend has important implications for merchants looking to optimize visibility across AI platforms. “Shoppers are maximizing this holiday season by moving fluidly between channels, discovering products through AI, returning to stores, and choosing flexible payment options like Buy Now, Pay Later (BNPL),” said Michelle Gill, General Manager, Small Business and Financial Services at PayPal.
Small business owners can capitalize on this momentum by ensuring their products are displayed optimally across AI-powered platforms. This allows us to connect with consumers who are increasingly looking for guidance on deals and gift ideas. Visibility is critical to success, especially since 34% of respondents plan to use AI to find the best deals and 30% plan to use AI to compare products.
Equally important is the increasing proliferation of BNPL options, which have gone from a novelty to a mainstream expectation among consumers. Half of those surveyed are willing to use BNPL during the holiday season, citing affordability and budget management as their main motivations. This payment method can be particularly powerful. The survey found that 52% of consumers are more likely to make a purchase when BNPL is available. Gill highlighted the benefits of offering BNPL, saying, “When shoppers know they can pay over time, they are more likely to complete their purchase.” PayPal data shows that average order value has increased significantly by 91% for businesses and 62% for small and medium-sized businesses.
While embracing these tools can provide significant benefits, small business owners must consider the practical applications and challenges that come with them. To implement AI effectively, businesses must invest time and resources into optimizing their online presence. It includes product listings that reflect AI algorithms to ensure your digital channels are well-maintained and easy to navigate.
Additionally, adopting the BNPL option comes with its own unique considerations. Integrating this payment method may require a partnership with a financial services provider, which can be a potential barrier for small businesses with limited budgets. Ensuring these payment choices are visible throughout the customer journey may require a thoughtful marketing strategy.
Another notable trend in the survey is the resurgence of omnichannel retail. Approximately 64% of shoppers plan to shop in physical stores this holiday season, highlighting the importance of a multi-channel strategy. Businesses need to ensure a seamless shopping experience across online and in-store platforms to increase customer loyalty and sales. Survey results show that 74% of consumers tend to shop with merchants that offer cash back or rewards, making rewards programs an essential part of attracting customers.
As the holiday season approaches, small business owners must quickly adapt to evolving consumer behavior. Companies that can integrate online and offline experiences while offering meaningful rewards are more likely to build deeper relationships with their customers. This strategy not only helps with holiday rush, but also helps with long-term growth.
In light of these findings, leveraging AI and offering BNPL can be key differentiators for small businesses. By embracing technology and the evolving retail environment, even the smallest businesses can compete effectively during this busy season. For more information about this survey and its implications, visit PayPal’s original release at: PayPal Newsroom.
