Key Point to Remember
RFID tags are tiny electronic devices that store information and communicate with other devices using radio waves. You’ll find RFID tags being used in all sorts of ways, from tracking inventory to monitoring livestock movement.
Even though RFID (Radio Frequency Identification) tags are becoming more common in our daily lives, a lot of people still aren’t familiar with how this technology works. These tags are placed in various items to make tasks like managing inventory and improving supply chain visibility much easier. RFID technology plays a big role in streamlining operations, boosting accuracy, and collecting data without needing direct contact or even a clear line of sight.
In this article, we’ll dive into what RFID tags are, how they work, the pros and cons of this technology, and some of the ways they’re being used today.
What Exactly Is an RFID Tag?
RFID tags are a type of tracking system that uses smart barcodes to identify items. RFID stands for “radio frequency identification,” meaning these tags rely on radio waves to do their job.
The way it works is simple: the tag sends data through radio waves to a reader, which then passes the information to an RFID software program. While RFID tags are commonly used to track merchandise, they’re also handy for tracking vehicles, pets, and even patients with Alzheimer’s disease.
Sometimes, you’ll hear RFID tags referred to as RFID chips.
How Do RFID Tags Actually Work?
An RFID tag works by sending and receiving information through an antenna and a microchip, which is also known as an integrated circuit (IC). The microchip on the RFID reader is programmed with the specific information the user needs.
Different Types of RFID Tags
There are two main types of RFID tags: battery-operated and passive.
- Battery-operated RFID tags have their own built-in battery for power. These are also known as active RFID tags.
- Passive RFID tags don’t use a battery. Instead, they rely on electromagnetic energy sent from an RFID reader to work.
Passive RFID tags communicate using three key frequencies:
1.125 – 134 KHz – Also known as Low Frequency (LF)
2. 13.56 MHz – Also known as High Frequency (HF)
3. 865 – 960 MHz – Also known as Ultra High Frequency (UHF)
4. Near-Field Communication (NFC) – Operates within the High Frequency (HF) range
The frequency used to send information impacts how far the tag can be read.
When a passive RFID tag is scanned, the reader sends energy to the tag, powering it just enough for its chip and antenna to send information back. The reader then passes this data to an RFID software program, where it’s processed and interpreted.
Types of Passive RFID Tag
There are two main types of passive RFID tags: inlays and hard tags.
- Inlays are usually very thin and can be easily attached to different surfaces.
- Hard tags are, as the name suggests, made from tough materials like plastic or metal.
Active RFID tags work using one of two main frequencies — 433 MHz or 915 MHz — to send information. They have three key components:

- The tag
- An antenna
- The interrogator (or reader)
The battery in an active RFID tag typically lasts about 3-5 years. Once the battery runs out, the whole tag needs to be replaced, as the batteries aren’t designed to be swapped out.
Types of Active RFID Tag
There are two main types of active RFID tags: beacons and transponders.
- Beacons send out a signal every few seconds, and their data can be picked up from several hundred feet away. Since they’re constantly transmitting, their battery drains faster.
- Transponders work more like passive RFID tags and need a reader to communicate. When a reader is nearby, it sends a signal to the transponder, which then responds with the needed information. Because transponders only activate when near a reader, they use less battery than beacons.
Here are some common uses for RFID tags:

RFID (Radio Frequency Identification) tags are small devices that use radio waves to transmit data to a nearby reader. They’re used in a wide variety of applications because they can store and send information wirelessly.
* RFID Inventory Management: Businesses use RFID tags to keep track of products in warehouses or stores. This helps them know what’s in stock and where items are located.
* Supply Chain Tracking: RFID tags are attached to goods during shipping, allowing companies to monitor their movement from factories to warehouses to stores, improving logistics and reducing errors.
* Retail: Some stores use RFID tags on products to manage inventory and prevent theft. This also speeds up checkout processes, as items can be scanned all at once instead of one by one.
* Asset Tracking: Companies attach RFID tags to expensive equipment or tools, helping them keep track of these valuable assets and prevent loss or theft.
* Access Control: RFID tags are commonly used in ID cards for secure access to buildings or restricted areas. Employees or authorized personnel simply scan their RFID-enabled cards to gain entry.
* Contactless Payments: Some credit cards and payment systems use RFID technology to allow customers to make payments by tapping their card or device near a reader.
* Animal Tracking: RFID tags are used in animal microchips to identify pets or livestock. This helps owners and farmers monitor their animals’ health and location.
* Libraries: Many libraries use RFID tags to manage book lending and returns. This makes it easier to track books and automate the check-in/check-out process.
Examples of RFID Tags
Active RFID tags are constantly sending out a signal, making them ideal for real-time tracking needs, like tolling and vehicle tracking. While they tend to be on the pricey side, they offer a long read range, which can be a big plus depending on the application.
On the other hand, passive RFID tags are a much more affordable option, costing about 20 cents each. This makes them a go-to choice for things like supply chain management, race tracking, file management, and access control.
Though passive RFID tags don’t need a direct line of sight to work, their read range is much shorter compared to active RFID tags. But they’re small, lightweight, and can last a lifetime.
Active RFID tags, with their larger and more rugged design, are built for applications where durability matters. You’ll often see them used in toll payment systems, cargo tracking, and even in devices that track people.
Benefits of Using RFID Tags
What Are Some Key Benefits of Using RFID Tags?
- Increased Efficiency: RFID tags can be read quickly and accurately, speeding up the process of tracking items and making operations more efficient.
- Better Accuracy: Unlike barcodes, RFID tags don’t need to be in plain sight to be read. This means they can still work even if they’re hidden or covered up.
- Lower Labor Costs: Since RFID tags can be read automatically, there’s no need for manual scanning, which helps reduce labor costs.
- Enhanced Security: RFID tags can be encrypted and given unique identifiers, making it harder for fake or unauthorized items to slip into the supply chain.
- Real-Time Tracking: RFID tags provide up-to-the-minute data on where items are, helping businesses manage their inventory and optimize their supply chains.
- Durability: RFID tags tend to last longer than barcodes, which can wear out or become unreadable over time.
Overall, using RFID tags offers plenty of advantages for businesses aiming to improve how they manage inventory and their supply chains.
Downsides of RFID Tags
RFID tags aren’t always the best choice compared to other tracking labels, and there are a few reasons why. Some of the main issues with RFID include both security concerns and technology challenges.
Security Issues
One big problem with RFID tags is that they can’t tell the difference between readers. This means that once a tag leaves the supply chain, almost anyone with a reader could access the information on it. Since RFID readers are portable and some tags have a long range, scammers can potentially gather data they shouldn’t have. In other words, your personal info could be collected without you even knowing.
Another worry is that RFID tags can sometimes be linked to credit cards, making it easier for financial theft and fraud to happen.
Technology Issues
There are also signal issues that can occur with RFID inventory systems. Since they use radio frequencies, RFID systems can get jammed or disrupted, which can make them less reliable. This can lead to longer wait times and lower productivity, especially in retail or warehouse environments.
There are also signal problems that can happen with RFID systems, like collision (when signals from multiple readers overlap) or interference from metal, water, or magnetic fields nearby.
Set-Up Issues
Setting up an RFID system can be a long and complicated process. Companies have to test different hardware and tags to figure out what works best, which can take months. Plus, beyond the cost of the tags and scanners, the extra time and labor needed to get everything running smoothly adds to the expense.
Because of these challenges, many businesses still prefer using barcodes, which are a more straightforward and affordable option for data collection and inventory management.