Facebook users set to log on and claim discounts with location service

UK companies are to offer Facebook users everything from free cups of coffee to cut-price theme park rides after the social networking giant launched a service allowing people to log on and claim special rewards.

The launch of Facebook Deals is likely to bring location-based services into the mainstream, according to experts who warned that companies, including Foursquare, will be looking over their shoulders.

Facebook users can "check in" with Facebook Deals using their mobile phones and will be presented with a range of offers from local shops. The service is part of Facebook Places, the group's location service, which was launched last year.

Facebook Deals went live in the United States in November and Emily White, director for Local at Facebook, said the service had been "very successful". She declined to reveal the exact numbers but said millions of Facebook users had taken advantage of deals, and more than half of the retailers involved had renewed their deals.

Mike Butcher, the editor of the website TechCrunch Europe, said: "Facebook will take location-based services into the mainstream. It has 26 million monthly users in the UK, so if anyone can make it work it is them."

Facebook has over 500 million users worldwide. Facebook Deals was launched in the UK yesterday – as well as in Canada, Spain, Italy, France and Germany – with brands including Starbucks, Debenhams, O2, Mazda and Alton Towers all offering deals.

The service is expected to prove popular with companies because redeeming an offer will show up in customers' Facebook news feeds, essentially advertising the products to their friends. Ms White added: "The wisdom of friends has taken over from the wisdom of crowds."

Retailers using the service offer Facebook users one-time discounts, free merchandise, loyalty deals for frequent customers and ways of allowing businesses to donate to particular causes.

Existing location-based networks should be nervous about the expansion of Facebook Deals, Mr Butcher said. He pointed to Foursquare as being under threat, although added that the giant discount provider Groupon operated in a different space. "There is little evidence Foursquare has gone mainstream," he said. "While Facebook is already scaling the location service across Europe."

Ms White said the aim was "not to compete but launch a product our users find compelling", adding that Foursquare is a "strong company".

At the moment, Facebook is not making money from the service although it may see some increased advertising from its partners. "It is free at the moment. We would not shut the door on revenue sharing in the future, so who knows?" Ms White said. "We may end up monetising it."

Checking in has prompted concerns over privacy as users pinpoint their locations, although it is voluntary, with thoughts the fears may hold back the growth of the service.

Ms White said: "Online identity has shifted. The concept that your friends may know where you are could become more compelling. People will become more comfortable with what is online."

She added that Facebook credits, the payment system for the games on its platform, is currently not planned as part of Facebook Deals.