Payment choice shapes holiday sales and shopper loyalty

Merchants that don't accept a shopper's preferred payment method could lose both the purchase and future business, according to the seventh annual U.S. Consumer Holiday Spending Study from TSG and the Electronic Transactions Association.

The study, released Oct. 29, found 57 percent of consumers would respond negatively if their preferred payment method were unavailable. Nearly one-quarter (24 percent) would shop for the same product elsewhere, 26 percent would complete the purchase using another method but be less likely to return, and 7 percent would abandon or postpone the purchase.

The remaining 43 percent would use another payment method without being bothered by the experience.

"Payment acceptance can directly affect both conversion and retention," the report stated. The findings come as consumers report greater financial pressure heading into the holidays. Forty-four percent said they were more financially stressed than last year, compared with 27 percent who reported increased stress in the 2025 survey. Affordability concerned 64 percent of respondents, while 57 percent were concerned about managing their holiday budgets.

Familiar payment options gain ground

Tap-to-pay led the newer payment methods examined in the study, with 81 percent of respondents reporting occasional or frequent use. Among consumers who had tried it, 89 percent used it regularly.

Digital wallets and P2P apps also showed substantial repeat usage. Sixty-one percent of respondents used digital wallets regularly, while 60 percent regularly used P2P apps. Among those who had tried these methods, regular usage reached 80 percent and 78 percent, respectively.

BNPL had a smaller regular user base, at 21 percent of respondents. Nevertheless, 20 percent expected to use it more often for holiday purchases than last year, while 25 percent anticipated similar usage. Forty-seven percent did not plan to use BNPL.

Opinions about installment payments remained divided: 37 percent viewed BNPL favorably, 36 percent unfavorably and 27 percent were neutral.

Among favorable respondents, managing large expenses was the leading reason for their view, cited by 52 percent. Among unfavorable respondents, 73 percent cited concerns about accumulating debt.

AI helps shoppers research, but control matters

Consumers were more receptive to AI-assisted shopping research than to letting an AI tool complete a transaction.

Forty-six percent said they probably or definitely would use AI to compare prices during holiday shopping. Forty-four percent expected to use it to find product availability, and the same share anticipated using it to locate discounts or deals. Forty-three percent expected to research products or reviews with AI.

By contrast, 23 percent probably or definitely would allow AI to make a purchase on their behalf, while 62 percent probably or definitely would not.

Shopping plans continued to span physical and digital channels. Among respondents answering the holiday shopping channel question, 80 percent expected to shop in stores, 62 percent planned to use retailer websites or apps with home delivery, and 35 percent expected to use online marketplaces. Respondents could select multiple channels.

The report recommended that acquirers, ISOs and processors treat payment acceptance as a conversion and retention tool, support consistent experiences across channels and present BNPL with transparent terms.

TSG and ETA surveyed 1,099 U.S. adults Sept. 8 to 13, 2026. The study reported a margin of error of plus or minus 3 percentage points at a 95 percent confidence level.

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