Radio frequency identification (RFID) is a method of remotely storing and retrieving data using devices called RFID tags. An RFID tag is a small object, such as an adhesive sticker, that can be attached to or incorporated into a product. RFID tags contain antennas to enable them to receive and respond to radio-frequency queries from an RFID transceiver.

An RFID system may consist of several components: tags, tag readers, tag programming stations, circulation readers, sorting equipment, and tag inventory wands. Security can be handled in two ways. Security gates can query the ILS to determine its security status or the tag may contain a security bit which would be turned on and off by circulation or self-check reader stations.

The purpose of an RFID system is to enable data to be transmitted by a portable device, called a tag, which is read by an RFID reader and processed according to the needs of a particular application. The data transmitted by the tag may provide identification or location information, or specifics about the product tagged, such as price, color, date of purchase, etc. RFID quickly gained attention because of its ability to track moving objects. As the technology is refined, more pervasive-and invasive-uses for RFID tags are in the works.

RFID tags can be either active or passive.

Passive RFID tags do not have their own power supply: the minute electrical current induced in the antenna by the incoming radio-frequency scan provides enough power for the tag to send a response. Due to power and cost concerns, the response of a passive RFID tag is necessarily brief: typically just an ID number. Lack of its own power supply makes the device quite small: commercially available products exist that can be embedded under the skin. The smallest such devices commercially available measured 0.4 mm × 0.4 mm, and thinner than a sheet of paper; such devices are practically invisible. Passive tags have practical read ranges that vary from about 10 mm up to about 5 metres.

Active RFID tags, on the other hand, must have a power source, and may have longer ranges and larger memories than passive tags, as well as the ability to store additional information sent by the transceiver. At present, the smallest active tags are about the size of a coin. Many active tags have practical ranges of tens of metres, and a battery life of up to several years.