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Artificial intelligence (AI) and buy now, pay later (BNPL) are transforming how shoppers discover and purchase products, particularly during the holidays and other busy seasons. Together, they can help businesses boost conversion rates and increase sales.
AI is changing how shoppers find products. Buy now, pay later (BNPL) is changing how people purchase those products. Together, they help remove friction at the moments that matter most.
Our “2025 Holiday Shopping Survey” found many Americans already use AI on their shopping journey. And when BNPL is available at checkout, customers surveyed are 52% more likely to complete a purchase.1
Explore how AI is changing e-commerce and what that means for the way shoppers discover products. And learn how to pair the latest BNPL trends with AI-driven product discovery and flexible payment options to help drive stronger holiday sales.
Table of contents
AI for e-commerce uses data to help you show the right products at the right time. It analyzes browsing behavior, product details, and live signals to improve search, recommendations, and site performance.
AI in e-commerce helps you apply data in practical ways to:
Some of the more evolved systems can handle multi-step tasks on their own. This is where agentic AI comes in. It handles tasks like updating listings or adjusting campaigns while keeping shoppers in control of what they browse and buy.
AI in e-commerce helps shoppers find, compare, and evaluate products faster. It supports discovery and decision-making without taking control away from the customer. With AI in e-commerce, you can:
The impact is already clear. Our research shows that 40% of Americans surveyed used AI to help with a purchase in the past year, with adoption even higher among Gen Z and millennials surveyed.1
These AI consumer trends set the stage for the following technologies shaping e-commerce today.
Large language models (LLMs) are the technology behind tools like popular generative AI chatbots. These models understand and generate human-like text.
In e-commerce, merchants can use LLMs to create engaging and persuasive content like:
They can also power sophisticated AI shopping assistants that help customers search, compare, and choose products more efficiently before moving to checkout.
AI agents are more advanced than traditional chatbots. They are a form of artificial intelligence that can act autonomously on a customer's behalf.
An AI shopping assistant or agent can research, compare, and eventually complete a transaction. For example, a customer could ask an agent to find the highest-rated 4K TV under $800 and apply any available financing. The agent would execute the search, compare options, and move directly to checkout. Customers still retain control over final purchase decisions and authentication steps.
Computer vision gives a device’s software the ability to see and interpret images. Multimodal search allows customers to search using several combined input types, like text and an image.
This technology gives merchants a powerful way to improve product discovery. When a shopper uploads a photo of an item they like, the AI uses computer vision to analyze the image and text, then finds the closest match within your catalog in different colors, styles, or price ranges.
AI-driven data analytics is important for understanding your business and customers. It uses machine learning to find hidden patterns in your sales, inventory, and customer behavior data.
For example, AI can predict which items will likely sell out during the holiday rush, helping you adjust your stock. It can also segment your customers into groups, allowing for highly targeted marketing campaigns.
AI helps e-commerce businesses operate more efficiently and deliver more relevant shopping experiences at scale. It achieves these results by boosting sales, improving product discovery, and reducing manual work.
Here are some specifics as to how AI can support your e-commerce business:
BNPL gives shoppers the option to split purchases into smaller payments, adding flexibility at checkout. As BNPL is changing e-commerce, it also helps you capture sales that might otherwise stall over price concerns.
Using BNPL options in your business, you can:
Combining AI with BNPL for merchants helps you support shoppers at two critical points: discovery and purchase. AI surfaces relevant products and guides comparison, while BNPL can help reduce checkout friction by
offering flexible payment options on eligible purchases. Together, they create a smoother path from interest to purchase and set the foundation for the following strategies.
The AI assistants or chatbots you use should have full access to your catalog and your payment options. If a shopper asks for a gift idea and the AI recommends a $1,200 item, the agent should immediately be able to add something like, "And you can pay for this over 12 months with a flexible plan."
This integration removes the need for the customer to search for financing options on their own. It provides a complete, seamless answer that connects product to payment method, which is a key part of AI-driven commerce.
Don't wait until the checkout page to introduce flexible payment options. Use the data from AI to embed BNPL information wherever the product is displayed.
When AI recommends a high-ticket item, including BNPL messaging can help reduce hesitation. If an AI-powered widget recommends an item on your homepage, it can display the estimated BNPL installment payment alongside the price, helping shoppers understand their payment options immediately.
Use your data to see which products get a sales lift when you offer BNPL options. AI can analyze purchasing patterns and flag items that consistently convert better with flexible payments.
Once you spot these trends, you can surface BNPL earlier for those products across the customer journey map, i.e., from product pages to promotions. This makes financing visible at the moments it matters most and helps you fine-tune marketing and merchandising around items that benefit most from flexible payment options.
Personalization tools can dynamically target BNPL messaging to specific customer segments. Examples of these tools include personalized email campaigns or pop-up notifications on your website.
Take AI email personalization as an example. AI can identify price-sensitive segments and tailor emails that highlight flexible payment options. You can also target shoppers who often abandon high-value carts.
Personalized on-site messages that surface BNPL while the customer browses higher-priced items can help alleviate their sticker shock. This helps bring them back or preventing them from leaving in the first place.
AI is reshaping how customers find products, while BNPL helps determine whether they complete a purchase. PayPal helps you bring these two moments together, so discovery and checkout work as one experience.
With PayPal, you can offer BNPL options that fit naturally into AI-driven shopping journeys, backed by insights into changing consumer behavior. This helps you reduce friction at checkout and convert browsing interest into actual sales.
Explore PayPal’s buy now, pay later solutions to see how they can support your e-commerce business.