• Online retailer issued $1 billion in loans over past 12 months
  • Credit competes with similar products from PayPal, Square

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 $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 2 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…