What Is RFID Technology, and How Does It Work?

RFID technology has evolved for various uses. It can handle simple tasks like locating your remote control. RFID technology can also handle detailed tasks such as warehouse inventory management, unlocking hotel rooms, and tracking patients in hospitals. The applications of this technology are endless.

If you’re considering implementing RFID technology in your company, you might wonder, “What is RFID technology?” and “How does RFID work?” We can provide examples to explain both and weigh the pros and cons of integrating this technology into your business.

What Is RFID?

RFID stands for “Radio Frequency Identification.” It’s a form of wireless communication that uses radio waves created through electromagnetic coupling to communicate between devices. Radio waves change in amplitude to communicate between devices and work over both short and long distances. Depending on the device’s frequency, messages can travel from as short as 1 centimeter to almost 1,000 meters.

How Does RFID Work?

RFID has four main components that, when used together, enable the efficient communication of data: tags, antenna, reader, and host system. 

The antenna sends a command signal that powers the tag attached to a product or logistic unit. The “inlay” is the working part of the tag, consisting of a microchip and antenna, both attached to a substrate. The inlay antenna collects energy from the reader antenna to power up the chip. The chip accesses its built-in memory (holding product data) and sends it back to the reader antenna. The antenna picks up the data, and a reader interprets it. This can be a “fixed” reader, such as something wall- or ceiling-mounted, or a “mobile” reader. The reader forwards that data to a host system to store and evaluate the data.

RFID tag include Chip + Antenna + Substrate = Inlay

Active RFID Tags

An active tag has an internal power source. The power source and tag are self-contained as a single unit, enabling it to regularly communicate with a reader.

Passive RFID Tags

In contrast to an active tag, a passive tag doesn’t have its own power source. Instead, it is powered by being in proximity to a reader. The electromagnetic field provides energy that powers up the passive tag. When the passive tag activates, it can transmit, or backscatter, data to the reader.

Get a GS1 Company Prefix

Get Started with RFID with a GS1 Company Prefix

When you license a GS1 Company Prefix, you can create serialized GTINs to be used in your Electronic Product Code (EPC), which is the unique identifier for RFID tags.

How Are RFID Tags Used?

Beyond its popular use in inventory management, RFID has diverse applications for both large and small companies across various industries.


Consumers increasingly demand more product information and faster purchase fulfillment. To meet these expectations, retailers and brands are looking into how they can better use their existing technologies. Already implemented by many retailers and brands for inventory management, RFID offers additional opportunities for cashierless checkout, product authenticity, and claims compliance.

Case Study: Decathlon

Decathlon uses EPC-enabled RFID to uniquely identify all of it’s products worldwide


With multiple business processes across multiple trading partners, RFID can be used as a key building block in establishing interoperability across the food supply chain. A new digital food supply chain can be unlocked with the help of RFID to support regulatory requirements, increase customer safety and satisfaction, and more.

Golden State Foods

Delivering visibility with a side of innovation


Full visibility into the entire journey of medication or medical devices helps ensure product quality and patient safety. Blind spots in that journey are a challenge for the healthcare industry. However, RFID can overcome this by offering automatic, unique, and actionable product identification. Additionally, it ensures interoperability with all trading partners along the supply chain.

Standards and Sensors for Visibility in the Pharmaceutical Cold Chain

Visibility and interoperability for cold chain configurations and beyond

Is RFID the Right Solution?


There are many great reasons to implement RFID technology into your company. Tags can be as thin as a piece of paper and as small as a postage stamp. It’s not costly to buy a large amount of small yet powerful tags for whatever you need.

RFID tags are so light that adding them to items doesn’t significantly increase an item’s weight. Finally, an RFID system is future-proof—passive tags can last up to 20 years since they don’t need batteries and are very durable.


While an RFID-tag system is an affordable option, it doesn’t come without its costs. However, recent advancements in technology have made RFID more affordable and accessible.

You should consider the advantages and disadvantages of an RFID system to determine if it suits your project’s needs and budget. Understanding how this technology works is an important part of making your decision to implement a system in your company.

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The RFID solution has made my life easier, and we have saved money by being more accurate in our shipments. Honestly, when I first heard about the benefits of RFID discussed, I thought, ‘Why would anybody not want to do this?’”

Tracy Harrington
Wholesale Account Executive, Southern Fried Cotton