A survey by The Strawhecker Group and the Electronic Transactions Association highlights a nuanced picture of holiday spending this year. While economic uncertainty has many consumers budgeting cautiously, 18 percent of respondents still anticipate overspending.
The survey, conducted among 992 consumers in early October of this year, also found that 46 percent had already begun shopping, and one in five had completed at least half of their holiday purchases. Most plan to spend between $250 and $500, similar to last year, though over a third admitted they might exceed their budgets.
Consumers are prioritizing payment methods that offer convenience and flexibility, such as tap-to-pay and buy now, pay later (BNPL) options. The adoption of BNPL continues to grow, especially among Gen Z and millennials, with 58 percent of respondents new to these services. Merchants are advised to leverage data-driven tools to align with these shifting preferences and address consumer concerns, including those about shipping delays and gas costs.
Acquirers play a crucial role by helping merchants implement solutions like alternative financing and digital payment systems to optimize customer experiences during the high-pressure holiday season.
Pay-by-bank payments, powered by ACH and real-time payment networks, are gaining momentum in the United States, driven by adoption in cannabis dispensaries and other regulated industries.
CanPay, a leading provider for cannabis retailers, recently received approval to process payments for medical marijuana pharmacies across Utah, further cementing its presence in this niche market. Serving over 325,000 consumers at 1,150 dispensaries nationwide, CanPay facilitates secure account-to-account transfers from over 14,000 financial institutions, which highlights its commitment to compliance and innovation in a challenging regulatory landscape.
Meanwhile, mainstream retailers are also exploring pay-by-bank solutions. Walmart, in partnership with Fiserv, is piloting an ACH-based system that will eventually transition to Fiserv’s NOW network, integrating FedNow and RTP capabilities. And Visa announced plans to launch a similar service in Europe, underlining the global appeal of low-cost, account-to-account payment methods.
For merchants, the primary draw lies in significantly reduced transaction fees compared to card payments, which can save businesses thousands annually. As ACH and real-time payment networks expand, pay-by-bank has the potential to redefine payment preferences across industries.
As holiday shopping accelerates, pay later options are becoming an indispensable tool for retailers. Research by Splitit and PYMNTS revealed that 38 percent of consumers plan to use these services for self-gifting, with millennials and parents leading the charge.
Flexible payment plans, including BNPL and card-linked installments, are viewed as essential for managing holiday expenses while justifying larger purchases. Sixty-seven percent of parents surveyed said pay later options reduce financial stress. Fifty-two percent of millennials shared similar sentiments.
The study found that 62 percent of consumers prefer to know upfront if a retailer offers pay later services, which suggests the importance of early promotion to attract shoppers. Among the most popular categories for these payments are clothing, electronics, and luxury items, with 28 percent of respondents highly likely to rely on installment plans for such items during the holidays.
Retailers that highlight these options can not only boost sales but also enhance customer loyalty, as nearly half of surveyed parents and millennials indicated these services influence where they shop. The findings underscore the growing importance of flexible payment solutions in meeting consumer demands during the competitive holiday season.
The financial industry is grappling with a surge in fraud, with check fraud seeing dramatic increases despite the digital transformation of payments. According to a Unit21 report, 30 percent of surveyed banks have experienced check fraud growth of 25 to 75 percent over the past year, attributed partly to the resurgence of government assistance checks.
Donna Turner, a former Bank of America executive, emphasized the vulnerability of checks, describing them as “low-tech and easy targets” for fraudsters.
Fraud trends extend beyond checks, with scams now surpassing traditional fraud in both frequency and financial impact. Romance scams, phishing attacks and account takeovers are increasingly costly and time-consuming to address, exacerbating the financial burden on organizations. Unit21's research highlights a pressing need for AI-driven fraud detection systems and real-time monitoring to combat these threats effectively.
Survey participants, including representatives from banks and fintechs, noted that combining fraud and AML teams significantly improves operational efficiency. Investments in automation and stronger authentication protocols are also essential to staying ahead of emerging scams.
While challenges persist, organizations implementing advanced fraud prevention strategies reported improved detection rates and reduced losses, which offers a roadmap for addressing this escalating crisis.
Visa CEO Ryan McInerney strongly rejected a U.S. Department of Justice lawsuit accusing the company of monopolizing the U.S. debit market. McInerney labeled the claims as “meritless” and showing a lack of understanding of the payments ecosystem.
Filed in September 2024, the lawsuit alleges that Visa controls over 60 percent of U.S. debit transactions, generating $7 billion in annual fees, and employs anti-competitive practices such as “disloyalty penalties” to limit competition. The DOJ also claims Visa discourages new entrants by offering monetary incentives to potential competitors who agree to partner with Visa instead of challenging the card company directly.
Retail groups, including the National Retail Federation, praised the lawsuit, stating they view it as an opportunity to address longstanding concerns over high transaction fees. However, Visa insists it operates within a competitive environment, pointing to its 8 percent growth in payment volume for fiscal year 2024 as evidence of healthy market dynamics.
McInerney emphasized that Visa will vigorously defend its position, confident in the strength of its business model and the continued growth of the debit ecosystem.
Despite legal scrutiny, Visa said it remains focused on innovation and expansion. U.S. payment volumes grew by 5 percent year-over-year in the fourth quarter of fiscal year 2024, with card-present and card-not-present transactions contributing to steady growth. As fiscal 2025 begins, Visa sees opportunities to enhance its services and solidify its role in shaping the future of commerce. 
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