Radio Frequency Identification (RFID) uses radio waves to uniquely identify objects.
The tags can be active, containing a power source, or passive, simply bouncing a signal using the energy of the reader. Passive tags may be so small that they are hard to see; as of 2004, they can cost as little as 40 cents.
Their use in inventory control and retailing leads to comparisons to bar codes, which are also used in those applications. Bar codes are much less expensive to use but typically, only identify the manufacturer and the model; RFID tags are used to uniquely identify each unit. An additional advantage to RFID is that the signal can be read through most types of packaging--bar codes can only be read if they are directly within sight of the reader. The fact that RFID can be so easily read at some distance, up to 30 feet for passive devices and much longer for active ones, has raised issues about privacy. Once an item has been purchased, in theory, it can still be tracked.
RFID is used in other applications; inserted under the skin to identify pets and link them to their medical records, for example. This is important in the control of rabies and the EU is requiring this as a basic identification for pets that cross EU borders.
Although the technology has been around a long time--it was used to identify friendly bombers in WWII--it is only recently that costs have come down and standards developed to make their use practical across company and country borders.