Over the summer, Apple (NASDAQ:AAPL) CEO Tim Cook name-dropped PayPal (NASDAQ:PYPL) when talking up his company's advances in digital payments. The iPhone, Apple Watch, and new Apple Card are combining to create a big boost for the tech giant's double-digit-growth services segment.

Nothing against Apple, but PayPal is really one of the best digital payments investments right now as the war on cash rages on. Events in the third quarter of 2019 prove that point.

A woman holding a credit card and inputting the information into a laptop.

Image source: Getty Images.

A few numbers for context

One of PayPal's biggest strengths is its unstoppable momentum in signing new partnerships and agreements with vendors, technologists, and retailers. Payouts is one area of particular strength, with multiple big names announcing the use of PayPal and subsidiary Venmo during the third quarter. CEO Dan Schulman explained the breadth and diversity of interest the company is receiving in this regard during the earnings call:

In the quarter, Travelers Insurance announced customers can now receive insurance claim payments via PayPal. PepsiCo launched its first ever cash back loyalty program powered by Venmo and PayPal. Lime, the global scooter rental platform, selected PayPal to facilitate payouts to its network of freelancers. And Epic Games is now using our capabilities for competitive Fortnite players to expedite their prize payout process. This month, we added Venmo as a payout option providing merchants with another powerful way to reach Venmo's highly engaged user base.

As far as numbers go, all of that new business activity means user count and engagement are growing. Active accounts grew 16% year over year to 295 million (management said it expects to handily surpass its goal of 300 million during the fourth quarter), and average transactions per account grew 9% to 40. In terms of finances, that equated to a 19% increase in revenue to $4.38 billion and a 31% increase in adjusted earnings after backing out investment losses in Uber and Latin American e-commerce leader MercadoLibre.

At the rate it's going, PayPal is narrowing the gap with global payment processing leaders Visa (NYSE:V) and Mastercard (NYSE:MA). It may be a third the size of the former and less than half the size of the latter by market cap, but PayPal's revenues are knocking on the door of contention for biggest digital payments company in the world. An overlooked purchase back in September could be the fuel to put PayPal over the edge.

V Revenue (TTM) Chart

Data by YCharts.

Big news few are talking about

Foreign businesses have often complained about lack of access to China's massive (1.39 billion people) and fast-developing economy (6% GDP growth in Sept. 2019) -- an issue that has been one of the focal points during the U.S.-China trade war. E-commerce transaction value is growing 18.5% in the country this year, according to researcher Statista (during a bad year for the economy), with mobile payments accounting for more than half of the total. That's right up PayPal's alley, if only it could get a piece of the pie.

PayPal might have a solution. Where every other payment processor has been denied, in September, the Chinese government gave the company the go-ahead in purchasing a 70% equity interest in Guofubao Information Technology, otherwise known as GoPay. It's a huge milestone, one that has been largely overlooked -- perhaps because of the lack of specific detail that came with the deal announcement.

There are also two very large elephants in the room in need of acknowledgment: Alibaba's Alipay and Tencent's WeChat Pay, which together form a duopoly that has a stranglehold on the digital payments and e-commerce market in China. It will be an uphill battle, and the acquisition could add to those investment losses like the ones reported on Uber and MercadoLibre. But just as it is with PayPal's other strategic purchases, the long-term potential is huge.

Schulman added some comments during the third-quarter call:

This is a very significant development for us, and it has the potential to dramatically expand our total addressable market and our long-term growth prospects. The license enables us to expand upon our relationships with existing partners like China UnionPay and AliExpress, and forge new partnerships with China's financial institutions and technology platforms, allowing us to provide a comprehensive set of differentiated payment solutions to businesses and consumers in China and globally.

If PayPal's double-digit expansion everywhere else around the globe wasn't enough, adding China to the mix -- where no other non-Chinese payment processor operates -- surely makes this a top stock in the industry. With another strong quarter in the books, the future keeps looking rosier for PayPal.