NEW YORK (TheStreet) -- Along with strong 2016 second quarter earnings, Paypal (PYPL) - Get Report announced it will begin a long-term partnership with Visa (V) to allow customers to use Paypal when paying in stores with their smartphone, CNBC's Kayla Taushe reported on "Squawk Alley" Tuesday.

The partnership will also allow users of Paypal's app, Venmo, to instantly withdraw the money they get if they link it to their Visa debit cards.

PayPal reported robust second quarter earnings results, with revenue up 19.5% year over year to $2.65 billion, exceeding analyst estimates, PayPal CEO Dan Schulman told CNBC.

The company's transactions were up by 25% to 1.4 billion, it added 19 million new accounts with a 188 million people transacting 29 times a year, Schulman said.

More than half of the revenue earned, he says, is from outside of the U.S.

The partnership with Visa is a transformative deal for both companies, he said.

"Instead of us battling each other in the marketplace, we're going to be allies in pressing forward on digital payments," Schulman said.

Digital payments are a $100 trillion market, he added.

This deal allows PayPal access to Visa's in-store environment which holds 90% of the $100 trillion addressable market and gives PayPal cost certainty by collaborating with Visa in digital payments, he explained.

"They can give us a lot more customers. We can drive a lot more mobile and online volumes to them," Schulman said.

Shares of Paypal are trading up by 0.44% to $37.94 this afternoon.

(PayPal is held in Jim Cramer's charitable trust portfolio Action Alerts PLUS. See all of Cramer's holdings with a free trial)

Image placeholder title