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.


  1. Quick Response (QR) Code

    A Quick Response (QR) Code is a type of bar code which can be ...
  2. Mobile Payment

    A mobile payment is money paid for a product or service through ...
  3. Chip-And-PIN Card

    A credit card that contains data embedded in a microchip and ...
  4. Ending Inventory

    Ending inventory is a common financial metric measuring the final ...
  5. Point Of Sale - POS

    The place where sales are made. On a macro level, a point of ...
  6. Tax Identification Number - TIN

    A tax identification number is a number used by the IRS as a ...
Related Articles
  1. Tech

    3 Ways to Avoid Electronic Pickpocketing

    Learn what electronic pickpocketing is, and find out which steps you can take to avoid getting pickpocketed through commercial and do-it-yourself methods.
  2. Tech

    What Is VeChain?

    VeChain enables manufacturers to assign products with unique identities which are capable of recording information at every stage.
  3. Investing

    E*TRADE Enables Mobile Customers to Access Advanced Screening Tools

    E*TRADE rolled out advanced market scanning tools to the iOS version of its mobile OptionsHouse trading app.
  4. Personal Finance

    Be Wary of Financial Advice Heard on Radio, TV

    Radio and television is best left for entertainment, not financial advice.
  5. Investing

    Barclays Thinks Alibaba Can Hit $200 a Share

    If Alibaba continues to post blowout quarters, Barclays thinks the stock could hit $200.
  6. Investing

    Microsoft Patents Health-Oriented Smart Glasses

    Its head-mounted see-through device tells wearers the nutritional content of their food.
  7. Investing

    Alibaba Pushes Dual Strategy With New Stores

    Alibaba launched three new physical retail stores as it pushes its online/offline strategy.
  8. Investing

    CBS Radio Prices $1.46 Billion Debt Offering

    CBS Radio has priced a debt offering related to a proposal to spin it off from parent company CBS' (NYSE: CBS). The offering includes $400 million in 7.25% senior unsecured notes, due in 2024, ...
  9. Tech

    Can Blockchain Make Medications Cheaper and Safer?

    Blockchain-driven innovation has the potential to change the entire pharma lifecycle, from development through to delivery.
  10. Insights

    Amazon Unveils Three Glimpses of Retail's Future

    It's reinventing retailing with streaming video, drone delivery and grocery stores without checkouts
  1. What are the dangers of using the Electronic Federal Tax Payment System (EFTPS)?

    The Electronic Federal Tax Payment System (EFTPS) is a convenient way to file your taxes, but you need to be aware of some ... Read Answer >>
  2. What is the electronics sector?

    Learn more about the electronics sector and the challenges and opportunities presented to electronics companies by new and ... Read Answer >>
  3. Can Foreigners Open Savings Accounts in the US?

    Find out what it takes for a foreign individual to open a savings accounts in the US especially in the age of heightened ... Read Answer >>
  4. What are the key barriers to entry for companies in the electronics sector?

    Learn how the entry barriers of economies of scale and scope, research and development, capital and brand loyalty affect ... Read Answer >>
  5. Are there significant seasonal patterns in the electronics sector?

    Examine the consumer electronics sector and learn what typical seasonal sales patterns can be identified for this important ... Read Answer >>
  6. What is the difference between direct costs and variable costs?

    Learn about variable costs and direct costs, how direct costs and variable costs are classified and the differences between ... Read Answer >>
Hot Definitions
  1. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  2. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
  3. Dividend

    A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
  4. Inventory Turnover

    Inventory turnover is a ratio showing how many times a company has sold and replaces inventory over a period.
  5. Watchlist

    A watchlist is list of securities being monitored for potential trading or investing opportunities.
  6. Hedge Fund

    A hedge fund is an aggressively managed portfolio of investments that uses leveraged, long, short and derivative positions.
Trading Center