Information is sent to and read from RFID transponders by a reader using radio waves. In passive systems, which are the most common, The reader sends out electromagnetic waves that form a magnetic field when they "couple" with the antenna on the RFID transponder. A passive RFID transponder draws power from this magnetic field and uses it to power the microchips circuits. The chip then modulates the waves that the tag sends back to the reader and the reader converts the new waves into digital data. Then the digital data can be sent to a controlling computer for processing and management.

In active systems, a battery in the tag is used to boost the effective operating range of the tag and to offer additional features over passive tags, such as temperature sensing. Data collected from tags is then passed through familiar communication interfaces (cable or wireless) to host computer systems in the same manner that data scanned from bar code labels is captured and passed to computer systems for interpretation, storage, and action.