An RFID tag (sometimes called an RFID transponder) consists of a chip, some memory, and an antenna. RFID tags that contain their own power source are known as active tags; those without a power source are known as passive tags. A passive tag is briefly activated by the radio frequency (RF) scan of the reader. The electrical current is small, generally just enough for transmission of an ID number. Active tags have more memory and can be read at greater ranges. Vendors of RFID tags and readers include E.M. Martin, Philips, TagSys, and Texas Instruments.
RFID tagging is somewhat controversial because it makes it possible to gather information without individual knowledge and consent. For example, a person would not necessarily be aware of an RFID tag on a purchase and if that purchase was made with a credit card, the product identifier could be tied in to the individual's credit card information. Privacy organizations recommend that safeguards are put into place before RFID tagging becomes more widespread.
This information courtesy of Whatis.com.
This was first published in September 2005