Fueled by growth in transfer activity and a large boost in the number of agent locations globally, the Funds Transfer unit at MoneyGram International reported a sizeable boost in second-quarter revenue, though the company also experienced a decline in bill-payment income.

Total revenue for the unit was $308.3 million, up 8.6% from $283.8 million for the same period ended June 30 last year. The segment reported operating income of $38.6 million, up 49% from $25.9 million. Adjusted operating margin was 14.3%, up from 11.9%.

As a company, MoneyGram reported total revenue of $330.1 million, up 6.5% from $310 million. The company reported a $25.1 million loss partially attributable to $30 million set aside in connection with a possible resolution in a fraudulent telemarketing dispute with the U.S. attorney in Pennsylvania; it reported a $26.4 million profit a year earlier.

"The business performed well in a challenging environment through creative business initiatives and disciplined execution by our global team," Pamela H. Patsley, chairman and chief executive officer, said in the company's on July 26 earnings release. "We achieved impressive growth in sends originating outside of the U.S. and built upon our positive momentum from the first quarter despite the impact of the declining euro, economic malaise in southern Europe and high global unemployment."

Driving the performance was double-digit growth in agent locations, funds-transfer transactions, and funds-transfer fee and other revenue, Patsley said. "Our expansion in fast-growing alternative channels continues and now represents 5% of money-transfer revenue," she said.

Also during the quarter, MoneyGram reached an agreement to settle a pending shareholder lawsuit, Patsley said. Last week, MoneyGram agreed to pay $10 million to settle a consolidated 2011 lawsuit filed by an investor who claimed he would be shortchanged in a recapitalization plan, according to a report from Bloomberg.

During the quarter, funds-transfer transaction volume increased 13%, while funds transfer fee and other revenue increased 10.1%, to $282.1 million from $256.2 million in the second quarter of 2011. On a constant currency basis, funds-transfer fee and other revenue increased 13%, the company's fifth consecutive quarter of double-digit growth, MoneyGram said.

Funds transfers originating outside of the U.S. increased by 18%, while U.S.-to-U.S. funds-transfer volume grew by 10%. U.S. outbound transaction volume growth was 11%, led by U.S.-to-Mexico growth of 19% from a year earlier, according to the earnings release.

Bill payment transaction volume decreased 3%, while fee and other revenue decreased 6%, to $26 million. Excluding a fourth quarter 2011 divestiture, transaction volume increased 7% and fee and other revenue increased slightly, MoneyGram said.

Among the quarter's highlights included adding 1,000 locations in Spain; activating an additional 3,000 locations in India, including State Bank of India and India Post; and signing four banks in Pakistan that operate more than 650 locations in the $12 billion remittance market, the sixth largest in the world.

MoneyGram also signed an agreement with First California Bank, a top U.S. issuer of prepaid cards. MoneyGram's funds-transfer services will be available through the bank's online site. First California provides issuing services to hundreds of programs and millions of active cardholders, according to the earnings release.

The company also launched bill payment top-up capabilities from the U.S. for mobile-phone plans in several countries, including Brazil, Panama and Paraguay.

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