By David Henry

NEW YORK (Reuters) - Payments app Venmo will roll out its first major promotional campaign on Monday, intensifying its battle over young customers' wallets with big banks.

Its 15- and 30-second video ads will begin appearing nationally Monday evening on cable networks including MTV and Comedy Central, and on internet-based services Hulu and YouTube. ( The campaign also includes ads on posters, billboards, drink coasters and pizza boxes.

The move is a milestone for Venmo, which has largely acquired new users by word-of-mouth since its 2009 launch. It comes weeks after a consortium of banks decided on a name for a competing payments app, to be called Zelle.

Venmo's ads, viewed by Reuters, feature young people toasting beers or eating pizza while riding small horses, with the tagline: "Pony up with Venmo."

Its customers, primarily in the millennial generation, mostly use the app to split tabs among friends or share roommate expenses like rent and utility bills.

If Venmo's campaign works as intended, customers will learn to start typing the words "pony up" to create an emoji symbol of a pony and upward arrow, Kasia Leyden, Venmo's director of marketing, said in an interview.

Big banks including JPMorgan Chase & Co and Bank of America Corp have been haggling over the roll-out of their Zelle app, expected to launch in the first half of 2017.

Banks hold the vast majority of deposits, so they have a built-in advantage over apps like Venmo, which is owned by PayPal Holdings Inc.

But banks are playing catch-up when it comes to digital offerings that appeal to young customers. Meanwhile, Venmo has become a serious and savvy competitor.

PayPal has said the app handled $3.9 billion of payments in the second quarter, 1.4 times what it processed a year earlier.

JPMorgan said at an investor conference on Monday that in the first six months of this year the bank had handled $13.4 billion of digital payments between individuals, a 37 percent increase from a year earlier.

Most Venmo customers are in the coveted 18-to-35 age group, an important segment for banks because they represent the future of saving, borrowing and investing.


Leyden declined to say how much Venmo will spend on the new campaign, which will run for two months. Previously, Venmo's only real advertising was a short run of posters in the New York City subway system in 2014.

Venmo has been developing the campaign throughout this year, Leyden said, calling it a "fortunate coincidence" that it is beginning before the banks launch theirs.

Existing users told Venmo during interviews that the campaign is necessary, Leyden said.

"The feedback we get is, 'Can you guys start spreading the message yourselves and make sure I am not the only one doing the cheerleading?'" she said.

In addition to the TV ads, posters and billboards, Venmo has ordered pizza boxes with a "Peace of Pizza Agreement" printed on top that obligates those who eat from it to pony up with Venmo, or pay with "inconvenient, antiquated means," such as cash and checks.

Venmo is also distributing drink coasters at bars, and putting the marketing on pony-themed pedicabs in four cities where the app is catching on most quickly: Chicago, Austin, Texas, Portland, Oregon and Nashville, Tennessee. Some posters are customized for local specialties, such as paying bills for spicy chicken in Nashville and deep-dish pizza in Chicago.

To add a surprising incentive, Leyden said the company will occasionally pony up for someone with a pending request and pay, for example, their $50 share of a grocery receipt.

Overall, Venmo's goal is to lighten up the awkward moment of prodding friends for money, said Leyden.

"It is a pretty short campaign cycle, but it is meaningful to us," she said.

(Reporting by David Henry in New York; Editing by David Gregorio and Cynthia Osterman)