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What Are RFID Tags? How They Work, Benefits, and Top Uses

While most of us are familiar with barcodes (we encounter them at grocery stores and retailers), consumers are less acquainted with radio frequency identification (RFID) tags.

But even if we’re not aware of them, RFID technology is being used by many of the businesses we patronize. RFID tags are already used by retailers, financial service providers, the government, and the healthcare industry. The market for RFID technology is expected to exceed $25 billion by 2033.

In this article, we’ll explain how radio frequency identification technology works and how RFID tags are used to track assets as well as fixed inventory. We’ll also walk through some examples of how businesses use RFID asset tags and the asset management software that works with them.

Main Takeaways From This Article:

  • RFID (Radio Frequency Identification) tags are advanced asset labels that utilize radio waves, meaning they do not require a direct line of sight for scanning like traditional barcodes or QR codes.
  • RFID technology is widely used across various industries, including retail, healthcare, government, and finance, for supply chain management, inventory tracking, and access control.
  • There are three main types of RFID tags — passive, active, and semi-passive — each with different power sources, read ranges, and use cases, that work alongside readers, antennas, and supporting hardware.
  • While RFID provides significant benefits, challenges include higher upfront costs, setup complexity, potential signal interference, and ongoing maintenance, especially for active tags.
  • Asset tracking software like RedBeam integrates RFID data with other business systems, enabling real-time tracking, comprehensive asset histories, and more efficient asset management.

What Are RFID Tags?

RFID tags are a type of asset label that uses radio frequency identification (RFID) to identify assets or property. Most businesses own equipment, tools, and other property that they need to keep track of, and RFID is a technology that helps them do so more effectively.

Asset tags are usually used to label and track fixed assets. Fixed assets are property a business uses to create value for more than one year. The unique identifier can be an RFID tag, or it can be a barcode or QR (quick response) code.

RFID tags come in various form factors to suit different tracking needs. For example, RFID labels are thin, adhesive-backed tags often used in retail, libraries, and logistics. Other options include RFID cards, fobs, and hard tags for more durable applications like industrial equipment or outdoor assets.

Each RFID tag contains a unique code that corresponds to a record in an asset tracking system. These tags are placed directly on the asset or the container holding it, allowing businesses to uniquely identify items and track their location over time.

RFID labels are commonly stuck to product packaging, embedded in clothing tags, or placed on the inside cover of books to support efficient inventory management. Hard tags are often attached to the side or top of machinery, tools, or medical devices for easy scanning.

The Components of An RFID System

A typical business RFID system consists of several key components: RFID tags, readers, and antennas, plus supporting RFID hardware and software. These components work together to deliver seamless, efficient asset tracking and data management.

While tags, antennas, and readers handle data collection, supporting hardware and software automate processes, analyze sensor data, and integrate with inventory systems for more accurate, real-time asset tracking. Discover how each RFID component works together.

RFID Tag

At the heart of RFID technology lies the RFID tag: a compact component that stores crucial asset data. The tag comprises a microchip — sometimes referred to as an RFID chip or integrated circuit — and an antenna.

The primary function of an RFID tag is to store, manage, and send data when an RFID reader scans it. Each tag contains comprehensive information about its respective asset, such as its description, usage history, and metrics. The tag is placed directly on the asset for rapid tracking and tracing of assets and equipment.

RFID Antenna

The RFID antenna plays a crucial role, serving as the conduit for signal exchange between the RFID tag and the reader. It sends electromagnetic waves from the reader that activate the tag, which in turn communicates its information back to the reader, enabling successful data transmission.

RFID Reader

The RFID reader uses radio waves to communicate with the RFID tag. It emits a signal that activates the tag, prompting it to transmit the information it's carrying. This exchange happens virtually instantaneously, providing real-time data for effective asset tracking.

RFID readers come in two types: fixed or portable.

  • Fixed RFID readers are stationary devices installed in specific places within a facility to monitor tagged assets as they pass by. They’re typically mounted on walls, ceilings, entryways, and portals to track assets without manual scanning.
  • Portable RFID readers are handheld mobile devices that can read tags on the go, whether in a facility or during transit. Mobile readers can be manually pointed at assets equipped with RFID tags to wirelessly gather and share sensor data.

Supporting RFID Hardware

An RFID system relies on more than just tags, antennas, and readers. There are essential pieces of RFID hardware, like RFID printers and encoders, that enhance system functionality. These devices print and program tag information directly onto labels, ensuring assets are easily identifiable and trackable.

RFID portals, also called RFID gates, provide another layer of automation. As items pass through these gates, the system automatically detects their tags, capturing real-time location data without manual scanning.

Together, this supporting hardware streamlines asset tracking, improves accuracy, and helps businesses maintain reliable asset records. It also helps prevent security issues by monitoring asset movement and alerting businesses to unauthorized access or unusual activity.

RFID Software

RFID software is the brain of an RFID system, managing and analyzing sensor data collected from tags, readers, and antennas. It processes RFID information to provide real-time tracking, reporting, and insights that help businesses make informed decisions for inventory counts, maintenance schedules, theft prevention, and more.

Cloud-based solutions offer scalability and integration with existing inventory systems, simplifying asset management across locations. Platforms like RedBeam automate asset tracking by maintaining detailed records of location, condition, and user assignments to reduce errors, optimize operations, and improve asset visibility.

How Do RFID Tags Work?

While barcodes and QR codes provide a unique visual for the scanner to read with a camera or reflecting light, RFIDs don’t require a direct line of sight because they use radio waves to identify a tag.

RFID tags include an RFID chip with a minuscule antenna and a microchip with stored data. RFID readers send out an electromagnetic radio pulse, which triggers the tag to transmit data. Depending on the industry, businesses may use handheld RFID readers or fixed readers, which are often placed in doorways to track asset locations.

Types of RFID Tags

There are three main types of RFID asset tags. Let’s explore how they differ and what they’re used for.

1. Passive RFID Tags

Passive RFID tags are the least expensive option (as little as $0.10), but they're also less powerful. These tags have no power source or battery of their own, so they don't constantly emit a signal. Instead, when you use an RFID reader, a passive RFID tag draws energy from the waves emitted by the scanner.

Because passive tags rely on the scanner’s power, they have a smaller signal range, meaning you can usually only read the tag from a few feet away. Their low cost and lightweight design make passive tags popular among retailers and businesses that must process large inventories.

2. Active RFID Tags

Unlike passive tags, active RFID tags are battery-operated, which allows them to emit a radio signal regardless of whether or not a reader is being used. To make the battery last longer, active tags may emit a signal every few seconds or in response to a reader.

That internal power source and the fact that active RFID tags typically operate at a higher wave frequency give them a much greater signal range. Some active RFID tags can be read from more than 150 meters away, making them useful for real-time location tracking in a production facility.

Active RFID tags are also commonly used for identifying vehicles to collect toll fees. The drawback is that an active RFID tag is significantly more expensive than a passive one, and it needs to be replaced once it reaches low power or risks losing valuable tracking data when the battery dies.

3. Semi-Passive RFID Tags

As their name suggests, semi-passive RFID tags serve as a middle point between passive and active asset tags. Like active RFID tags, they are battery-operated, but their signal range (as much as 100 feet) isn’t as large. Sometimes called semi-active RFID tags, they provide both a functionality and a price point between the two extremes. They’re a good option for warehouses and other large facilities.

RFID Tag Frequencies

The frequency an RFID tag uses greatly affects how well it works and how effectively it can be applied. Let's explore low, high, and ultra-high frequencies.

1. Low Frequency (LF RFID)

Due to their short-range capabilities, low-frequency RFID tags operating at 125-135 kHz are utilized in both handheld and embedded applications.

They are especially useful in various sectors, such as animal tracking, for their robustness against metallic or water interference, providing an effective means to manage and monitor individual assets.

2. High Frequency (HF RFID)

High Frequency (HF) RFID tags, specifically the 13.56 MHz type, are great at handling medium-range applications. They're tremendously beneficial for tracking library books and enhancing the security and convenience of ID badges.

These tags help keep things organized and secure, automating processes and improving operational efficiency.

3. Ultra-High Frequency (UHF RFID)

Ultra-high frequency RFID tags, ranging between 860-960 MHz, are excellent for tracking assets over long distances, making them very useful for managing logistics and supply chains.

UHF RFID tags can be read from up to 40 feet away, which is great for keeping track of items as they move through the supply chain. This helps make operations run smoothly and ensures that assets can be easily found.

RFID Tag Categories and Functions

Beyond tag types and frequencies, navigating the various RFID tag categories is key to implementing an asset tagging system that’s time and resource-effective. Different RFID tags are designed for specific use cases, from everyday asset management to high-performance tracking in extreme environments.

Here’s an overview of the three primary types of RFID tag categories and functions.

Standard RFID Tags for General Use

Standard RFID tags are cost-effective solutions for basic asset tracking and inventory management. They typically operate on low frequency RFID, making them ideal for applications where shorter read ranges and lower costs are priorities. These tags are commonly used to track retail merchandise, manage warehouse inventory, and monitor office equipment for streamlined operations.

For these reasons, businesses looking to improve efficiency but still maintain a strict budget can benefit from an asset inventory management system with standard RFID tags. By integrating these tags into daily workflows, companies can reduce manual tracking errors, simplify resource planning, and ensure assets are accounted for in real-time.

Advanced RFID Tags for Complex Environments

Advanced RFID tags are designed for demanding environments where durability, extended read ranges, or enhanced data storage are essential. These high-performance tags withstand harsh conditions, making them ideal for manufacturing, logistics, and high-security applications.

In industries where security issues are a concern, advanced tags help protect assets by providing encrypted data and real-time tracking, even as items move through the supply chain. They ensure accurate monitoring in environments where standard tags may fail, offering businesses a more reliable and efficient tracking solution.

Specialty RFID Tags for Unique Applications

Some RFID tags are built for highly specific use cases, such as metal surfaces, extreme temperatures, temperature fluctuations, and medical environments. Specialty RFID tags are engineered to function in these challenging conditions, ensuring reliable performance where standard tags may not work or degrade over time.

Common examples include RFID tags for industrial equipment, livestock tracking, and healthcare asset management. These specialized solutions help businesses maintain compliance and improve safety, particularly in highly regulated industries. With RedBeam, you can print and encode new passive RFID ‘on metal’ equipment asset tags that perform reliably in rugged or unpredictable environments.

What Are RFID Tags Used For?

RFID tags have revolutionized multiple industries by significantly improving asset tracking and monitoring for organizations.

Their applications go beyond mere identification and qualification, offering comprehensive solutions for various operational needs.

1. Asset Tracking and Management

RFID tags allow businesses to track their resources in real-time. This technology helps organizations find and monitor their assets constantly, reducing loss and improving workflow. For an example of how RFID asset tracking allows businesses to manage their tools and equipment better, you need only look at your local hospital.

Some hospitals and other medical facilities use RFID tags to mark tools like portable ultrasound machines or patient monitoring equipment. Then, by placing fixed RFID readers in doorways, they can track where the equipment was last used. In a hospital with dozens or even hundreds of rooms, the ability to pinpoint a device can save hours of searching, as well as loss, theft, and unnecessary duplicate purchases.

2. Fixed Inventory Management

RFID tags are crucial for managing fixed inventory effectively. They help keep track of your stock accurately and reduce the risk of losing items. When used together with fixed inventory management software, RFID systems make processes more efficient and automated.

For instance, education is one industry where RFID tags can save tons of time while reducing asset loss. In many elementary and high schools, students check out textbooks for the school year and return them before the summer. With RFID tags, the librarian can scan dozens or hundreds of books at once, saving hours that might have been spent reading each barcode one by one.

3. Supply Chain Management

RFID technology makes supply chain processes more effective. Even by attaching only one tag to goods or containers, businesses can smoothly track assets at each stage of the supply chain. This assures timely delivery and helps keep a sharp eye on fixed inventory. What's more, vital product data can be stored on RFID tags, reducing the chance of mistakes and loss and confirming the authenticity of items.

Let's consider a practical example from the manufacturing industry. Car manufacturers, for instance, use RFID to track parts on the assembly line. If a part is defective, the system can swiftly find its source. This quick response reduces waste and time spent fixing issues, helping the company save money, boost production, and keep up with quality standards.

4. Access Control and Security

RFID tags have become essential in boosting security and creating smooth access systems in many areas. These small yet powerful tools are often used in systems that control access, letting only authorized people enter restricted zones. For instance, when an employee's ID card is equipped with an RFID tag, agencies can keep accurate track of their staff's movement, even in vast facilities.

For example, government agencies use RFID-enabled tags to beef up security, controlling access to highly secure areas and sensitive data. When a tag is scanned by an RFID reader, the system verifies the user's security clearance and either grants or denies access. This helps safeguard the organizations' resources and data and contributes to staff members' safety.

Benefits of RFID Technology vs. Other Tracking Methods

RFID technology offers various advantages over traditional tracking methods like barcodes. Here's a breakdown of its key benefits:

  • Enhanced Asset Tracking: RFID tags enable precise monitoring of asset locations across multiple sites, significantly reducing loss and theft. This technology is utilized by various sectors, including retail, financial services, government, and healthcare, underscoring its importance in modern asset management practices.
  • Condition and Value Monitoring: Asset tags and tracking systems help monitor the condition and value of assets, facilitating effective maintenance and extending equipment life. Platforms like RedBeam allow for maintaining a comprehensive history of assets, including all maintenance and repairs, which are essential for lifecycle management and budget forecasting.
  • Comprehensive Asset Histories: With RedBeam, businesses can keep a full history of their assets, allowing for better care and extended asset life. Tracking the lifecycle of different assets aids in anticipating replacement costs and creating more accurate budgets.
  • Error Reduction: RFID asset tags, along with barcodes and QR codes, significantly reduce or eliminate human error associated with asset documentation, allowing for asset audits to be performed with greater speed and accuracy compared to manual entry methods.
  • No Line of Sight Required: Unlike barcodes and QR codes, RFID tags do not require a direct line of sight for scanning. This feature makes it easier to scan asset tags without worrying about the exact label location, enhancing the flexibility of asset tracking efforts.
  • Extended Read Range: RFID technology offers varying read ranges, from a few feet to over 150 meters, depending on the type of RFID tag used. This variability in range enhances the adaptability and effectiveness of asset-tracking efforts across different environments.
  • Simultaneous Tag Reading: One key benefit of RFID tags over barcodes and QR codes is the ability to read multiple tags simultaneously, improving efficiency and streamlining the fixed inventory and asset tracking processes.
  • Specialized Functionality: Some RFID tags come equipped with additional features like temperature sensors, which are vital for managing perishable goods and sensitive assets. These tags offer specialized functionality that goes beyond basic tracking.

RFID Tag Disadvantages

While RFID tags have many benefits, they have drawbacks, too. It's crucial to have a balanced view of this technology to make an informed decision about whether it's the right fit for your operations.

Set-up Issues

Setting up an RFID system can be a lengthy and demanding process. It requires careful testing of different hardware and tag systems to find the best fit, a task that can extend over months. In addition to the cost of the RFID system components like tags and scanners, you should also be aware of the increase in time and labor expenses associated with the setup.

Higher Cost Compared to Barcodes and QR Codes

Given the advanced technology packed into each RFID tag, it's no surprise that they're more expensive than traditional barcodes or QR codes. Although the prices have decreased over the years, the cost can still be prohibitive for some businesses — especially those with tight budgets — making barcode asset tracking beneficial to smaller operations.

Potential Signal Interference

While RFID technology is powerful, it can still be affected by certain types of interference. Factors like metal, liquids, and other magnetic fields in the surrounding area have the potential to disrupt signal transmission, making tag reading in certain environmental conditions a challenge.

Maintenance and Battery Replacement for Active RFID Tags

Understanding the requirements for maintaining your active RFID system is essential. While the costs and effort may seem significant, the return on investment from the benefits of quick and accurate asset tracking can far outweigh these challenges.

  • Battery Life: Active RFID tags typically have a battery life of 3 to 5 years, but this can vary based on usage. Some high-end models may last up to 7 years.
  • Replacement Costs: When a battery's life is exhausted, the entire RFID tag typically must be replaced. This is an ongoing cost that must be factored into your budget.
  • Maintenance Efforts: Frequent checks are required to ensure your active RFID tags are working effectively and aren’t reaching low power. Battery failure could mean losing valuable tracking data.

Unlock Advanced Asset Tracking with RedBeam

RFID tags offer a powerful solution for businesses seeking more functionality from their asset labels. With the ability to scan large quantities at once and store meaningful data directly on the tag, RFID technology streamlines asset tracking and scales operational efficiency across sectors. Choosing the right RFID system ensures accurate, real-time insights into your inventory and equipment.

RedBeam makes it easy to implement the right RFID technology, whether you’re tracking tools, office equipment, or warehouse inventory. Our platform supports RFID tags, barcodes, and QR codes, giving your business the flexibility to choose the best solution for your needs. We partner with industry leaders like Zebra Technologies to provide high-quality, warranty-protected asset tracking technology.

Along with a simple and intuitive user interface, RedBeam enhances security and productivity with role-based access, protecting high-value equipment, sensitive data, and restricted zones. Our REST API also enables you to connect your asset records to just about any other tool, maintaining ultimate visibility across multiple locations and maximizing asset management for businesses of all sizes.

If you’re ready to see how RedBeam’s flexible asset management platform works with RFID asset tags, schedule a demo today.

FAQs

What Is the Range of RFID Asset Tracking?

The range of RFID asset tags can vary widely, depending on the type of RFID tag. Some passive RFID tags may only be readable from within one foot. Active RFID tags that use high radio frequencies, however, can have a signal range of more than 150 meters.

What Is the Difference Between Passive and Active RFID Tags?

The difference between passive and active RFID tags is that active RFID tags have their own power source in the form of a battery. Passive RFID tags, on the other hand, have no power source of their own. They only transmit data when an RFID reader sends out an electromagnetic pulse, drawing power from the reader’s radio waves. Semi-passive RFID tags have a battery, but they aren't as powerful as active RFID tags.

Can RFID Track Stolen Items?

While RFID technology is useful for detecting theft, it can't generally be used to locate an item once it has been stolen. For example, some retailers attach RFID tags to merchandise, which are only removed after the item is purchased. RFID readers at the exit will set off an alarm if someone tries to leave with an unpurchased item. RFID tags aren't geographically trackable like GPS-enabled items.

How Much Does an RFID Tag Cost?

The costs of RFID tags depend on their type. Passive RFID tags are the least expensive and can be purchased for as little as $0.10. The most powerful active RFID tags can cost as much as $25+. Semi-passive RFID tags are more expensive than passive tags but less expensive than active tags.

Can RFID Tags Be Hacked?

While it's technically possible to hack RFID tags, it's quite challenging to do so due to their lack of traditional network connectivity. However, it's crucial to implement measures like data encryption and authentication protocols to enhance protection. Additionally, using sophisticated RFID systems, like the one provided by RedBeam, can further safeguard your data and assets from potential threats.