To reply "merry Christmas" you can simply say "merry Christmas" back, or you can be more creative and respond with a festive greeting such as "happy holidays" or "wishing you all the best for the season". You can also add a personal touch by mentioning something special about the other person, such as "merry Christmas to you and your family" or "hope you have a wonderful holiday season". The most important thing is to show your joy and goodwill towards the other person.