The company faces rising costs as regulators worldwide crack down on money laundering and said that such costs would continue to rise.

"We will be spending more on compliance in the second-half of the year than we did in the first half," said Raj Agrawal, who was named chief financial officer on July 15.

The company said compliance-related expenses are expected to be about 3.5-4 percent of revenue in 2014.

Western Union, which gets most of its business from migrant workers sending money home, has lost ground in Mexico, a key market, after it was forced to close about 7,000 outlets over the last two years due to compliance issues.

Revenue from consumer remittances, which account for about 80 percent of its revenue, rose 2 percent during the quarter.

Western Union has cut prices and invested heavily in its online businesses to fend off nimble online rivals such as privately owned Boom Financial Inc and Xoom Corp.

Western Union has ramped up its own online money transfer business. This posted 31 percent growth in the latest quarter, although it accounts for 3 percent of overall revenue.

Chief Executive Hikmet Ersek said on a conference call that he does not see a need for additional price cuts this year.

The company's net income fell to $193.8 million (£153.69 million) in the second quarter ended June 30 from $198.6 million a year earlier.

Earnings were flat on a per share basis at 36 cents.

Revenue rose 1 percent to $1.40 billion, while expenses rose 2 percent to $1.13 billion.

Analysts on average had expected earnings of 36 cents per share on revenue of $1.42 billion, according to Thomson Reuters I/B/E/S.

The Englewood, Colorado-based company's shares, which have gained about 10 percent in the last three months, closed at $17.47 on the New York Stock Exchange on Thursday.

(Reporting By Neha Dimri in Bangalore; Editing by Sriraj Kalluvila)

By Neha Dimri