A radio-frequency identification (RFID) system has two core components:

• An RFID transponder, typically a tag or label containing a chip (integrated circuit or IC) that has been programmed with information and antenna
• Reader - a transceiver/decoder interpreting the information

The reader emits high-frequency modulated RF signal combining power and commands. The tag receives the signal and utilizes its power. A typical tag has a simple microprocessor. It recognizes received commands and returns its own ID and data stored on it.

The Low and High Frequency electromagnetic inductance type tags can only transmit signals over short distance, but they are used worldwide because the frequencies are standardized from 100 to 135 kHz (LF: low frequency) and 13.56 MHz (HF: high frequency).

The Ultra High Frequency tags are utilizing the backscattering technology.  Based on the antenna pattern, the signals can be transmitted over longer distances, using the 800 or 900-MHz band. However, their frequencies have not yet been standardized worldwide.

Passive tags are very cheap devices aiming to replace barcodes. They can be read in a wide variety of circumstances, where barcodes or other optical- read technologies are useless. The tag need not be on the surface of the object (and is therefore not subject to wear), the read time is typically less than 100 milliseconds, and large numbers of tags can be read at once rather than item by item.
Active RFID battery powered transponders can be read from a long distance. They provide various functionalities and can host a more powerful processor and memory. Their life is limited by the life of their power source. Active tags can be pinpointed, when the position of the tag is required.