DEFINITION of 'Radio Frequency Identification (RFID)'

A technology that allows the identification of an item using radio waves. Radio frequency identification, or RFID, is typically employed using a microchip and an antenna, and as part of a logistics system can allow companies to keep inventory of products. RFID technology began in the 1970s.

BREAKING DOWN 'Radio Frequency Identification (RFID)'

RFID systems have a variety of applications, including logistics management and monitoring the location of individuals and products. Consumers are likely to interact with RFID systems in stores that attach a small RFID transponder to a product, such as a laptop or other device. The RFID transponder is comprised of a microchip that contains information about the product, and an antenna that allows the microchips information to be read by a scanner or reader. The antenna can either be powered by a battery embedded in the system, or can be recharged by a scanner.

Retailers used to rely on barcodes to connect data about an item, such as the specific product being scanned, with sales terminals. Barcodes require an electronic scanner to pass information, and the scanner has to be directly oriented with the barcode in order to function. Because RFID technologies use low spectrum radio waves, a scanning device does not have to “see” the RFID microchip or antenna directly. Barcodes also contain a limited set of information about the product, such as the manufacturer, while RFIDs are able to hold more information because a microchip is being used.

While RFID technology has increased in popularity over the years, it is still used less frequently than barcodes because of cost. The technology is more likely to be used in situations in which a single company passes a product through several locations that it controls, since the information programmed on the RFID microchip may be proprietary and not shared with outside companies. The electronic devices required to read RFID tags are also substantially more expensive than barcode scanners.


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