The 2025 holiday shopping season delivered 3.5-4.5% year-over-year growth versus 2024, signaling continued resilience in consumer spending despite elevated price sensitivity.

Beneath the topline, however, spending patterns diverged by income segment, age cohort, payment type, and channel. Debit cards emerged as the volume growth leader; credit cards remained central for higher-income households, and Buy Now Pay Later (BNPL) continued to scale among younger and mid-income consumers – particularly in digital channels.

Overall Spend and Channel Mix: In-Store Still Dominates, Digital Drives Disproportionate Influence

Despite continued momentum in e-commerce, in-store purchases represented the majority of 2025 holiday retail spend, accounting for approximately 75% of total payment volume, with digital channels representing roughly 25%. This mix remained consistent with recent years, underscoring the enduring role of physical retail for gifting, experiential shopping, and last-minute purchases.

That said, digital channels continued to outpace in-store growth and exerted an outsized influence on how consumers chose to pay. E-commerce and in-app purchases served as the primary testing ground for new payment experiences, financing options, and checkout innovations. As a result, while stores anchored total holiday dollars, digital channels disproportionately shaped incremental spending, payment mix shifts, and consumer expectations.

Channel behavior diverged meaningfully when layered with payment type and demographic segment. BNPL transactions were overwhelmingly digital, with an estimated 65-75% of volume occurring online, reflecting its native integration into e-commerce checkout flows. Credit card spending skewed more balanced, but incremental holiday growth leaned digital, particularly among higher-income households and discretionary categories such as electronics and travel-related gifting. Debit card usage remained predominantly in-store, with roughly 65-70% of debit transactions occurring at physical points of sale, driven by everyday gifting, budget control, and immediacy.

Demographics further amplified these differences. Younger consumers exhibited materially higher digital behavior, while older and lower-income households remained more store-centric. Importantly, even among digitally inclined segments, in-store purchases still represented a majority of holiday dollars – highlighting that channel preference is situational rather than absolute.

Payment Type Performance by Customer Segment

Figure 1: 2024-2025 Estimated Holiday Spend YoY Growth

Note: mid-point was taken in estimated range

Debit Cards: Strongest Growth Among Middle- and Lower-Income Consumers

Debit card spending increased an estimated 5-7% year over year, with outsized growth among households earning under $100K. These consumers favored debit for everyday gifting and essentials, using it as a budgeting tool amid ongoing cost-of-living pressure. Debit also performed well in-store, where it accounted for a higher share of transaction count.

Credit Cards: High-Income Spend Concentration

Credit card spending grew an estimated 2-4% year over year, but growth was heavily concentrated among higher-income households ($150K+), who accounted for a disproportionate share of total holiday dollars. These consumers continued to use credit cards strategically, prioritizing rewards, premium benefits, and float. Credit cards dominated higher-ticket categories (electronics, travel-related gifts) and remained the primary payment method for affluent shoppers both online and in-store.

BNPL: Younger, Digital, and Discretionary

BNPL volumes rose an estimated 10% year over year, driven primarily by Gen Z and younger millennials, as well as middle-income consumers ($50K-$125K). BNPL was most prevalent for fashion, electronics, and home goods, where consumers sought payment flexibility without revolving balances.

The Implications for Financial Institutions

• Segmented strategies are critical: One-size-fits-all payment propositions tend to underperform in an increasingly stratified consumer base.
• Debit deserves investment: Rewards, real-time controls, digital wallets, and streamlined disputes are essential to sustain debit growth.
• Credit must continuously earn engagement: Value-driven rewards and personalization are now table stakes for consumers.
• BNPL is channel-driven: Winning in BNPL requires ownership of the digital experience (pre-purchase, during purchase, and/or post-purchase), real-time decisioning, and targeted marketing.

The Bottom Line

2025 holiday spending growth was real, but uneven. Payment winners were those aligned to specific customer segments, income-driven behaviors, and channel-shaped payment journeys.

If you’re curious to learn more about the competitive and dynamic credit card market check out our recent SRM Perspectives Report on the Future of Credit Cards & Digital Wallets.

Sources: All growth ranges should be considered industry estimates and based on analysis of disclosures from Visa, Mastercard, Valera, Fiserv, NRF, Adobe, Federal Reserve, and other processor and issuer commentary.

Published by Bob Rohr on February 12, 2026.