RFID stands for Radio Frequency Identification. It is an automatic identification technology to identify objects by using invisible radio waves. Instead of optically scanning bar codes on a label, RFID uses radio waves to capture data from tags. One of key characteristics of RFID is that it does not require the tag to be seen to read its stored data. This means that a tag can be placed either inside or outside. To accomplish this, two components are essential, reader and tag. A transponder has a microchip that contains information uniquely identified itself, such as a serial number. A reader sends out a radio signal that wakes a tag from its dormant state. The transponder then responds with a coded radio signal to uniquely identify itself. The reader converts the radio waves returned from the tag into a form that can be passed on to computer that can further utilize the information.