* Q4 net income $237.9 mln vs $452.3 mln year ago
* FY 2013 earnings per share forecast $1.33 to $1.43
* Consumer-to-consumer revenue falls 2 pct
* Company to reduce fees amid rising competition
Feb 12 (Reuters) - Western Union Co, the world's largest money transfer company, forecast a decline in 2013 earnings as it cuts prices to keep up with nimble competitors that have eroded its market dominance.
Western Union said it expected to earn between $1.33 and $1.43 per share in 2013, compared with $1.69 per share in 2012. The Englewood, Colorado-based company also reported a 47 percent decline in fourth-quarter earnings.
Smaller rivals such as MoneyGram International Inc have won market share by charging less for transferring money, competition that has intensified since the lapse of some of Western Union's exclusive contracts with financial institutions.
The company said in a statement that it expects to incur expenses of $45 million this year as it looks for additional cost savings, which might include job cuts.
Chief Executive Hikmet Ersek has come under fire from restless investors who have demanded a strong response to the decline in earnings.
Speaking on a conference call with analysts, Ersek said he expected lower transaction fees to result in a decline in revenue this year in Western Union's mainstay business as an agent for the transfer of money between individuals.
But he forecast that consumer-to-consumer revenue would grow "in the following years due to anticipated increases in consumer usage and loyalty".
Western Union said consumer-to-consumer revenue, which accounts for more than 81 percent of its total revenue, fell more than 2 percent in the fourth quarter. Total revenue fell less than 1 percent to $1.42 billion.
Net income in the three months to Dec. 31 fell to $237.9 million, or 40 cents per share, from $452.3 million, or 73 cents per share, a year earlier. Excluding items, the company earned 42 cents per share.
Analysts on average had expected earnings of 35 cents per share on revenue of $1.4 billion.
In a recent filing with the U.S. Securities and Exchange Commission, Western Union said proposed laws in some countries in Africa, south Asia and eastern Europe would prevent exclusive deals with agents.
This could increase competition in India and Russia, where the company's premium prices can sometimes be 50 percent to 60 percent higher than those of its competitors.
In Mexico, Western Union's near-20-year exclusive relationship with Mexican financial services group Grupo Elektra ended last February and the company's transactions in the country have declined while MoneyGram's have grown.
Western Union's shares were down 3 percent after the bell. They closed at $14.34 on the New York Stock Exchange on Tuesday.