How Responsible Financing Helps Retailers Protect Margins This Holiday Season

Holiday spending is heating up, but so is consumer debt. Adobe projects online spending to grow 5.3 percent this season, with 27 percent of shoppers having financed big-ticket purchases like appliances and vacations over the 2024 holiday season.

The rise in financed purchases is part of a broader credit expansion that’s defined the past decade of online retail. Easy financing options boosted sales but introduced risk: repayment issues, disputes, and brand-trust erosion. Retailers now face a difficult balance as customers expect flexibility. Traditional credit reduces risk but slows the process, while instant buy now, pay later (BNPL) options do the opposite — speeding up sales but heightening exposure.

With credit bureaus now factoring BNPL into consumer scores, users will likely be unsure how these loans affect their credit. And especially for large items, uncertainty leads to checkout hesitation. When credit options aren’t clear or aligned with customer health, retailers absorb the fallout from returns and chargeback rates.

Amid peak shopping season, hiccups in checkout or financing can cost sales. Nearly one in five online shoppers abandoned a cart last quarter because the checkout process felt too long or complicated. The answer isn’t simply faster financing; it’s smarter, pre-qualified, friction-free credit from leading banks and lenders that integrates cleanly into every channel. These responsible credit options are emerging as a key way to protect profits and preserve customer trust.

Responsible Credit for Responsible Customers

Banks are competing with fintechs in consumer financing with smarter, data-driven models built for retail checkout flows. Instead of leaving customers to apply for last-minute third-party credit, banks can extend pre-approved lines directly to customers — usable across retail partners — so consumers know their purchasing power before they start shopping.

During the holidays, that distinction matters. Responsible lending means offering the right credit for the right purchase: structured loans for big-ticket items like travel or appliances and short-term installments for smaller gifts. Behind the scenes, open banking data, purchase history, and verified financial profiles enable banks to lend responsibly in real time, ensuring financing matches the customer’s needs and the type of purchase. It keeps banks front and center instead of competing for wallet share at checkout. This infrastructure also allows banks to onboard new customers instantly through secure, data-driven decisioning.

Through embedded lending programs from top-tier banks and lenders, retailers can match BNPL’s convenience without the risk. Because credit is bank-issued, approvals rely on tried-and-tested decisioning and underwriting, ensuring finance remains responsible. Retailers display available credit options seamlessly within payment flows, removing uncertainty and preventing abandonment.

This approach gives shoppers clarity and control and gives retailers "business-as-usual" transactions, fewer disputes, and better visibility into repayment behavior. For big-ticket items, structured bank loans balance flexibility with responsibility, turning financing into an operational upgrade that strengthens loyalty long after the holidays.

Financing as a Loyalty Engine

Responsible, embedded lending doesn’t just streamline checkout; it strengthens customer relationships. When financing is transparent and built around a customer’s actual financial profile, shoppers buy with trust.

In fact, consumers spend about 51 percent more with retailers they trust. Integrated, transparent financing shifts from a transactional layer to a relationship engine that fosters repeat visits and heightens customer lifetime value.

Retailers also gain richer insight. Repayment patterns reveal steady customers and those that are stretching — signals that sharpen outreach, rewards, pricing, and marketing strategies. Instead of reacting to disputes, retailers can reward responsible behavior early and strengthen relationships.

Forward-thinking retailers should treat financing as part of the loyalty ecosystem itself. This holiday season and beyond, responsible, competitive lending will define retail success, protecting margins while supporting customers’ financial health.

Yaacov Martin is CEO and co-founder of Jifiti, a leading fintech company that he co-founded in 2011.