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Snapchat is secretly testing a new location service allowing users to add special stickers to their pictures.

The firm has been testing the feature on its iOS app, using the iPhone's GPS system to pinpoint users and show the filters.

For instance, Snapchat users who use the service in Brooklyn are shown a clear filter with the word 'Brooklyn' written in an artistic font on the bottom, while those in New York's financial district get a special filter showing a shower of dollar bills.

Enthusiastic Snapchat users in New York show off their custom filters featuring the word 'Brooklyn', when in Brooklyn,  and a sea of cash when pictures are taken near NYC's financial district.

Users who use the service in Manhattan's theater district receive a custom filter with the words 'Broadway' in yellow lights.

Other users have received customized filters around events such as Gay Pride.

The new smart filters don't offer any photo-editing effects.

They are clear filters with a graphic overlay.

They look similar to they type of stickers that have been popularized by stand-alone photo editing applications. 

The filters appear to be a hit with users of the service - although Snapchat has not yet acknowlegded their existence or officially launched them.

'Super cute snapchat filters based on your location the future is now' @juliacosette, a Snapchat user, tweeted.

'What is this new snap chat filter. I like it.' tweeted another user, @debzshin.

Snapchat currently doesn't offer sponsored filters, however the company recently debuted its first customized branded filter at Cannes Lions advertising festival.

Snapchat partnered with a publisher to add a corporate logo to snaps taken at a party along with the phrase, 'Yes we Cannes'.

It's easy to see how branded stickers and sponsored filters could become a potential revenue stream for the company, which isn't currently making money, experts say.

Snapchat users are quick to share their new photo filters with friends and Twitter followers, but remain perplexed by the new feature

Brands such as Taco Bell and Rebecca Minkoff have sent out hundreds of snaps, and the ability to add their logo to Snapchat content could add extra legitimacy to their efforts.

Last December, the app released its first major update when it added its first line of filters along with a 'replay' function.

In May, Snapchat unveiled its own in-app instant messaging and video chat service.

Last week, the company announced it was testing a new group-sharing feature for concerts and live events called Our Story. 

Both Apple and Facebook have released similar ephemeral messaging services in attempt to capitalize on Snapchat's runaway success.

Facebook released Slingshot, its own service for sending self-destructing messages to friends in mid-June.

Apple also added the ability to send self-destructing audio and video messages via iMessage.

To enable new smart filters, update the app, go to the app's settings menu, scroll down to 'Additional Services' and click 'Manage'.

Once there, ensure that you have the 'Filters' setting switched to 'on' and that you've given the app permission to pull your location.

Snapchat founder, Evan Spiegel, in the company's California headquarters.

The company is based in Los Angeles and is run by Evan Spiegel and Bobby Murphy, two former fraternity brothers at Stanford.

The service was first released in 2011 and quickly gained a following among high school students in Southern California.

The company does not reveal the number of people currently using its service, but says more than 700 million messages are sent each day.