Proximity-based Services (PBS) require high detection accuracy, energy efficiency, wide reception range, low cost and availability. However, most existing technologies cannot satisfy all these requirements. Apple's Bluetooth Low Energy (BLE), named iBeacon, has emerged as a leading candidate in this domain and has become an almost industry standard for PBS. However, it has several limitations. It suffers from poor proximity detection accuracy due to its reliance on Received Signal Strength Indicator (RSSI). To improve proximity detection accuracy of iBeacons, we present two algorithms that address the inherent flaws in iBeacon's current proximity detection approach. Our first algorithm, Server-side Running Average (SRA), uses the path-loss model-based estimated distance for proximity classification. Our second algorithm, Server-side Kalman Filter (SKF), uses a Kalman filter in conjunction with SRA. Our experimental results show that SRA and SKF perform better than the current moving average approach utilized by iBeacons. SRA results in about a 29% improvement while SKF results in about a 32% improvement over the current approach in proximity detection accuracy.