The holiday shopping season is here, and new research from TSG and the Electronic Transactions Association (ETA) reveals how inflation, payment preferences, and shifting consumer behaviors are transforming the way Americans spend and where they choose to shop.
Key Takeaway: Value, Flexibility, and Impulse Drive Holiday Spending
This year, shoppers are prioritizing value and payment flexibility more than ever. With inflation still top of mind, consumers are seeking out deals, incentives, and seamless payment experiences. The study found that impulsive spending is on the rise, as fewer shoppers plan to set strict holiday budgets compared to last year.
Small Businesses Can Capture More Holiday Revenue
One of the most compelling findings is that 36% of consumers say payment and checkout features influence their decision to shop at small businesses. In other words, local merchants who offer the same payment convenience as big-box stores (tap-to-pay, digital wallets, and fast, secure checkout) stand to win over new customers this season.
This opportunity is especially pronounced in rural America, where 54% of consumers prefer shopping locally. While rural shoppers have been slower to adopt new payment technologies, the study reveals that education and clear security messaging can help overcome hesitation, enabling rural merchants to capture a larger market share.
Payment Technology Adoption Is Accelerating
- 85% of consumers have tried tap-to-pay technology in the past year
- 48% have experimented with digital wallets
- Urban consumers are leading the way, making cities ideal markets for innovative checkout solutions
Security remains the top driver for adopting new payment technologies, with consumers seeking safe and reliable ways to pay, especially as digital wallets and contactless payments become increasingly mainstream.
Free Shipping Is King for Online Shoppers
The study also found that free shipping has emerged as the top priority for online shoppers, ranking even higher than price. Merchants who offer free shipping and flexible payment options are more likely to attract and retain holiday customers.
Impulse Spending Is Up, Budgets Are Down
- 40% of consumers won’t set a holiday budget this year, nearly double last year’s figure
- Only 18% plan to spend more on gifts than last year, but most will spend the same or less
- With 51% of consumers planning to spend over $500 on gifts, the stakes are high for merchants to capture every sale
What This Means for Merchants and Payments Providers
The message is clear: Modern payment technology isn’t just a convenience; it’s a competitive advantage. Small businesses, especially in rural and suburban areas, can drive more holiday sales by offering the payment experiences shoppers expect. For payments industry professionals, this is a call to support merchants with education, security messaging, and easy-to-adopt solutions.
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