Just what is RFID? And how does it work? The basic components of a radio-frequency identification system are an antenna, a transceiver, and a transponder, commonly called an RF tag. The tag is electronically programmed with information unique to the item to which it's attached.

The antenna, which is available in a variety of shapes and sizes, picks up a signal emitted by the tag and transmits it to a transceiver that's equipped with a decoder. The antenna can be always on, or it can be activated by a sensor.

The antenna often is packaged with the transceiver to become a reader that can be configured either as a handheld device or a fixed-mount device, such as those on toll booths that automatically debit motorists' accounts. The reader, which can receive radio waves from one inch to 100 feet or more, depending on power output and radio frequency, decodes the data encoded in the tag's integrated circuit, or silicon chip, and sends it to a computer for processing.

RFID tags can be read-only or can contain data that can be rewritten or modified. The former is called a passive tag, and the latter active. Passive tags usually contain 32 to 128 bits of data and often operate in a way similar to a common bar code. These tags are less expensive and lighter than the active variety and have an unlimited operational life.

Active tags, which can have as much as 1 Mbyte of memory, require internal batteries, which have a maximum life of about 10 years. In addition to having fewer capabilities, passive tags have a shorter read range and require higher-powered readers.