How Buy-Now-Pay-Later And Cash Back Apps Drive Holiday Shopping

As consumers gear up for the holiday, the financial stress of the season is growing for consumers, with 60% of U.S. consumers saying they’re feeling it this year. From a budgeting perspective, many consumers are looking towards financial tools to help with holiday shopping, including the use of buy-now-pay-later (BNPL) and cash back options. BNPL allows shoppers to pay for products in installments over time, however, today’s consumer is expecting more features from their payment apps including cash back options and gamification aspects.

This holiday season has become a high-stakes battleground between two competing visions of consumer finance. While BNPL giants like PayPal, Klarna, and upstart Sezzle are offering shoppers the ability to split purchases into installments, now sweetened with cash-back rewards, pure cash-back platforms like ShopBack and Venmo Stash are positioning themselves as the smarter alternative, promising real money back without the credit entanglement. The app that can best combine convenience, value, and rewards may capture a generation of loyal users.

Consumer Uses BNPL As A Budgeting Tool For Holiday Shopping

BNPL spending is projected to reach $19.8-20.4 billion between November and December, increasing 9-12% year-over-year growth compared to 2024. Cyber Monday is set to make history as the first single day to surpass $1 billion in BNPL spending, reaching $1.02-1.06 billion. BNPL is used as a budgeting tool as more consumers opt for flexible spending options and instant rewards through convenient apps and loyalty programs.

Major companies in the BNPL space include Klarna, Affirm, Afterpay, and PayPal. However, the major players are evolving beyond simple payment splitting to create comprehensive financial ecosystems. “This season, we’re making every BNPL purchase more rewarding by offering 5% cash back on all eligible BNPL purchases made through the end of the year,” stated Michelle Gill, general manager, Small Business and Financial Services for PayPal.

“Buy Now, Pay Later is reshaping how consumers approach spending, especially during the holidays,” said Charlie Youakim, CEO and co-founder of Sezzle. “When celebrations, travel, and gifting all collide, shoppers want to enjoy it all without breaking their budgets.” The global BNPL market is expected to reach $560 billion, and Cyber Monday 2025 is expected to be the first day BNPL spending surpasses $1 billion, explained Youakim.

Consumers Expected to Spend $127 Billion Over Thanksgiving Weekend 2025

ICSC’s 2025 Thanksgiving Weekend Intentions survey found that Americans plan to spend $127 billion between Thanksgiving Day and Cyber Monday. “This year’s results reinforce what we’ve seen all year: Consumers are ready to spend, but they expect value from their dollars.

Every year, there’s a question about whether the long holiday weekend still matters. And every year, the answer from consumers is the same: it does,” said ICSC President and CEO Tom McGee. More than a third (32%) of consumers rely on loyalty or membership programs, and 16% of survey respondents plan to use BNPL for holiday shopping over the weekend. While 14% of consumers rely on deal-aggregator, cash back, or price-tracking websites to monitor for deals leading up to the period from Thanksgiving Day through Cyber Monday.

Cash-Back Reward Platforms May Steal The Show From Pure Play BNPL

ShopBack officially launched in the United States in May 2025. The cash back and rewards platform, which uses gamified earning models, has established partnerships with retailers such as Amazon, Best Buy, Walmart, Macy’s, Ulta Beauty, Target, and Chewy. Recently, the company announced an exclusive partnership with Zara, offering 20% cash back for shoppers using the app.

“ShopBack gives shoppers a smarter, more rewarding way to save. Through our mobile-first platform, users earn real cash back on everyday purchases and even boost their earnings by playing games. With Amazon and thousands of other top brands already live, ShopBack turns everyday shopping into real, tangible value for U.S. consumers,” said Carolina Paradasm, General Manager, North America for ShopBack.

Rather than competing on credit like BNPL providers, ShopBack captures the growing demand for savings-first shopping. “We shift share from traditional coupon sites, browser extensions, and debt-driven models by giving users cash back and real money back, not deferred payments or points,” explained Paradasm.

PayPal is expanding its offering this season by giving 20% cash back on all eligible BNPL purchases. “Once consumers activate the offer in the PayPal app one-time, it automatically applies to all PayPal Pay in 4 and Pay Monthly purchases throughout the holiday season”, said Gill. “These rewards make every PayPal BNPL purchase more rewarding, helping consumers stretch their budgets and maximize savings at a time when value and flexibility matter most.”

Recently, Venmo (owned by PayPal) launched Venmo Stash, its first always-on cash back rewards program offering up to 5% cash back through a tiered structure that incentivizes deeper user engagement. The program features three curated merchant bundles targeting high-frequency spending categories

• Bundle 1: Walmart, Taco Bell, Lyft, GameStop, ESPN
• Bundle 2: Target, McDonald’s, TikTok Shop, Uber, Uber Eats
• Bundle 3: DoorDash, Amazon, Walgreens, Taco Bell

Financial Literacy Builds Loyalty

Sezzle has built an ecosystem centered around Sezzle Spend, the company’s rewards currency. Users can earn Sezzle Spend in a variety of ways: through Sezzle Arcade, where they download and play games and earn rewards for completing milestones. Through the use of gamification and rewards-based usage, the company has attracted a niche market with Gen Z and Millennials. Youakim, who has been focused on financial literacy since he co-founded Sezzle, was instrumental in the creation of Money IQ, where shoppers complete short financial literacy quizzes and earn Sezzle Spend for building their financial knowledge.

“We’re not just offering a way to pay over time; we’re building a lifelong financial journey for our users. Sezzle is evolving into a true one-stop shop for spending and saving, a digital payment ecosystem that brings together flexible payments, rewards, financial education, and a growing suite of shopping tools. Our goal is to help consumers make smarter choices, build confidence, and grow with us over time,” said Youakim.

BNPL And Cash Back Features Drive Mobile Commerce For Holiday

With mobile commanding 56.5% of all ecommerce sales, consumers will be gravitating to apps that make shopping more convenient and value-oriented, which is a big play for BNPL and cash back apps. Last year, only 31% of consumers shopped for gifts on mobile devices compared to a projected 50% this year.

The rapid convergence of credit flexibility and cash-back rewards into hybrid models that offer consumers the best of both worlds will dominate this holiday season. PayPal’s decision to layer substantial cash-back rewards onto its BNPL offerings and its addition of Venmo Stash are signals of where the industry is heading.

New incumbents in the cash back space and savvy BNPL brands that are targeting digital natives who are addicted to the mobile shopping experience are shifting the behaviors during the holiday season. Consumers navigating economic uncertainty want financial tools that feel less like debt instruments and more like smart money management. They want gamification, instant gratification, financial education, and above all, the sense that every transaction is working in their favor.

The BNPL market in the U.S. is expected to grow from $109 billion in 2024 to $184 billion by 2030. From 2021 to 2024, the BNPL market grew at a compound annual growth rate of 20.3%.

Adobe 2025 US Holiday Shopping Forecast complementary survey was based on responses from 5,000 U.S. consumers, fielded between September 9thand September 16th, 2025. The 2025 ICSC Thanksgiving Weekend Intentions Survey was conducted online from November 10-12, 2025. The survey represents a demographically representative sample of 1,015 respondents.