PayPal (NASDAQ:PYPL) reported some impressive numbers for the third quarter and added millions of active users to its platform. But how much bigger could it get?

In this Fool Live video from our Nov. 9 "Industry Focus" show, host Jason Moser and Fool.com contributor Matt Frankel, CFP, talk about the numbers and what investors could expect going forward. 

Jason Moser: Well, another one of our favorite payments companies here that reported last week, PayPal. I mentioned that I wasn't surprised with Square's (NYSE:SQ) numbers because PayPal had lobbied up such a great quarter earlier in the week. To your point there in regard to the user growth, the thing that stood out to me, and I went back a couple of calls to really confirm this because when I saw what I saw in the release, I thought wait a minute, what? Because that sounded like it was a much larger number than what they had initially guided for, and it was. If you go back to January of this year during their fourth-quarter earnings call, management had set the target in that call for 2020 to add approximately 35 million net new activity accounts. In this quarter 3 release, Matt, they upped that guidance, they now see adding 70 million net new active accounts for the year. So essentially, what's been going on all year long has more or less doubled the user growth that they had projected back at the beginning of the year and to no one's surprise. I mean, that is, they've raised guidance pretty much across the board.

Matt Frankel: Well, what's really standing out to me is, I wasn't surprised that they added a ton of users, say in the second quarter when everything was shut down and people were only shopping online and that kind of thing, what really surprised me is they kept that momentum going into the third quarter where, for the most part, everything's reopened. So they added over 15 million users in the third quarter alone, so I'm not surprised they raised their full-year guidance like that, and that they're keeping that momentum alive and really building out their base even when the economy's reopening. So that really stood out to me. Just they start to show you just how big PayPal's gotten. They processed $247 billion of payments this quarter, that is almost a trillion dollars of volume flowing through PayPal system on an annual basis.

Jason Moser: It's phenomenal, ain't it?

Matt Frankel: That's about 10 times what Square is doing by the way.

Jason Moser: Yeah. Exactly.

Matt Frankel: So this is huge and that's pretty much only online, they're not even really in the brick-and-mortar space to a big extent.

Jason Moser: Yeah, not to that extent. I mean, they added over one-and-a-half million merchants for the quarter, then up 28 million in total. The thing that I was really impressed with, Venmo continues to gain a lot of traction; 65 million users drove $44 billion-plus in total payment volume, that was up 61%, forecasting $900 million in Venmo revenue in 2021, but the thing that really stood out to me was that Venmo in 2021, will contribute positively to transaction margin dollars. We've been talking about this a lot, we've had listener questions with regard to Venmo on profitability, it sounds like 2021, there's you're profitable Venmo's, from what I can gather.

Matt Frankel: Yeah. Venmo is obviously something Square doesn't have, I'd call that a big differentiator for PayPal. The Venmo, PayPal ecosystem is ahead of where Square and Cash App is right now, I would call it. That may change, Square is trying to be a little different with its Cash App than PayPal is with Venmo. Correct me if I'm wrong, but I don't think PayPal's mentioned the desire to put a stock trading platform on Venmo to put Bitcoin capability into it or anything like that.

Jason Moser: Not to my knowledge.

Matt Frankel: So it's two different animals, and PayPal, they're trying to build out the payment network, Square is trying to be an all-in-one financial company for everybody. They can both coexist, they serve different use cases and there's a lot of room for both of them to keep growing from this point. A trillion dollars is not a ton when you think that the global card payment volume is in the $40-$50 trillion range, so don't let that $1 trillion numbers scare you into thinking that PayPal is done in growing.

Jason Moser: Very good point. Yeah, I totally agree. It seems like there's still plenty of wide-open space ahead for both companies to capture.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.