Radio-frequency identification (RFID) is the wireless non-contact use of radio-frequency electromagnetic fields to transfer data, for the purposes of automatically identifying and tracking tags attached to objects. The tags contain electronically stored information. Some tags are powered by and read at short ranges (a few meters) via magnetic fields (electromagnetic induction). Others use a local power source such as a battery, or else have no battery but collect energy from the interrogating EM field, and then act as a passive transponder to emit microwaves or UHF radio waves (i.e., electromagnetic radiation at high frequencies). Battery powered tags may operate at hundreds of meters. Unlike a barcode, the tag does not necessarily need to be within line of sight of the reader, and may be embedded in the tracked object.

Radio frequency identification (RFID) is part of the family of Automatic Identification and Data Capture (AIDC) technologies that includes 1D and 2D bar codes. RFID uses an electronic chip, usually applied to a substrate to form a label, that is affixed to a product, case, pallet or other package. The information it contains may be read, recorded, or rewritten.[1]

RFID tags are used in many industries. An RFID tag attached to an automobile during production can be used to track its progress through the assembly line. Pharmaceuticals can be tracked through warehouses. Livestock and pets may have tags injected, allowing positive identification of the animal.

Since RFID tags can be attached to cash, clothing, everyday possessions, or even implanted within people, the possibility of reading personally-linked information without consent has raised serious privacy concerns

(source: Wiki - http://en.wikipedia.org/wiki/Radio-frequency_identification)