RFID stands for Radio-Frequency IDentification. The acronym refers to small electronic devices that consist of a small chip and an antenna. The chip typically is capable of carrying 2,000 bytes of data or less.

A Radio-Frequency Identification system has three parts:

• A scanning antenna
• A transceiver with a decoder to interpret the data
• A transponder - the RFID tag - that has been programmed with information.

• It provides a means of communicating with the transponder (the RFID tag)
• It provides the RFID tag with the energy to communicate (in the case of passive RFID tags).

When an RFID tag passes through the field of the scanning antenna, it detects the activation signal from the antenna. That "wakes up" the RFID chip, and it transmits the information on its microchip to be picked up by the scanning antenna.

In addition, the RFID tag may be of one of two types. Active RFID tags have their own power source; the advantage of these tags is that the reader can be much farther away and still get the signal. Even though some of these devices are built to have up to a 10 year life span, they have limited life spans. Passive RFID tags, however, do not require batteries, and can be much smaller and have a virtually unlimited life span.