Radio frequency Data Identification allow for non-contact reading and are effective in manufacturing and other hostile environments where bar code labels are not feasible. It has established itself in a wide range of markets including livestock identification and automated vehicle identification (AVI) systems because of its ability to track moving objects.

A basic RFID system consists of three distinctive parts i.e. antenna, transceiver and transponder. The antenna emits radio signals to activate the tag and read and write data to it. The antenna is the link between the tag and the transceiver that controls the system's data acquisition and communication. Antennas are available in a variety of shapes and sizes. The antenna is amalgamated or binds together with the transceiver and decoder to become a reader that can be configured either as a handheld or a fixed-mount device. The reader emits radio waves in ranges of anywhere from one cm to 100 m or more, depending upon its power output and the radio frequency used. When an RFID tag passes through the electromagnetic zone, it detects the reader's activation signal. The reader decodes the data encoded in the tag's microchip and the data is passed to the host computer for processing. These RFID tags come in variety of shapes and sizes.