RFID is a technology that incorporates the use of electromagnetic or electrostatic coupling in the radio frequency (RF) portion of the electromagnetic spectrum to uniquely identify an object, animal, or person. RFID is coming into increasing use in industry as an alternative to the bar code. The advantage of RFID is that it does not require direct contact or line-of-sight scanning. An RFID system consists of three components: an antenna and transceiver (often combined into one reader) and a transponder (the tag).

The antenna uses radio frequency waves to transmit a signal that activates the transponder. When activated, the tag transmits data back to the antenna. The data is used to notify a programmable logic controller that an action should occur. The action could be as simple as raising an access gate or as complicated as interfacing with a database to carry out a monetary transaction. There are different types of frequency from low frequency 125kHz to Microwave 2.45GHz. Higher frequency will offer longer read range.

In the last two years, few giant company like Wal-Mart, Tesco. Marks & Spencer and Albertsons start to invest in this RFID in order to capture production and materials management activity, improve supply chain management and to prove the business value of Electronic Product Code(EPC).

This technology has been forecast to be the most mature and has the most immediate projected uptake market growth.