[NEW YORK] Amazon.com Inc's lending business is accelerating, highlighting one more way the online retailer is making money from e-commerce beyond simply selling products in its web store.

The company issued US$1 billion in loans in the past year to merchants selling on its marketplace. Amazon launched the lending business in 2011 and uses data from more than two million merchants to identify those it deems credit worthy.

Transaction processing companies PayPal Holdings Inc and Square Inc offer similar credit options using data from their payments businesses, creating new financing options for small merchants that could have trouble securing loans from banks.

Amazon charges merchants a commission on sales. PayPal and Square receive fees for payments. The idea of the lending business is that they will benefit by helping their customers grow. Amazon also charges its merchants for storage in the company's warehouses and packaging and delivery services.

The Seattle-based e-commerce giant has lent US$3 billion to more than 20,000 small businesses in the US, UK and Japan, the company announced Thursday.

PayPal in May announced it has issued more than US$3 billion in loans to more than 115,000 businesses globally through its PayPal Working Capital program launched in 2013. Square said it has provided more than US$1.5 billion in loans and merchant cash advances since launching in 2014, including US$251 million in the first quarter.

Amazon uses algorithms to identify merchants with good selling histories, who are offered loans ranging from US$1,000 to US$750,000 payable within one year. Those taking loans repay the company through sales made on the site.

Merchants often use the loans to buy more inventory and expand their businesses with new products, said Peeyush Nahar, vice president of Amazon's marketplace, who speaks Thursday at the Internet Retail Conference and Exhibition in Chicago. Amazon didn't disclose interest rates for its loans, but said they are lower than credit cards and cash advances merchants would otherwise use.

"We give them access to capital when others don't because we get their business model when maybe others don't," Mr Nahar said.

BLOOMBERG