RFID tags are product identification tags which use RF energy radiated toward them by an external source to reflect back identification information contained in the tag.

As RFID tags become smaller and cheaper they will become the product identification mechanism of choice.

The advantage of RFID for business to business uses is that entire pallets of varied products can be scanned once and each individual product packed in the pallet can be accounted for. On an even larger scale this will eventually be made to work with entire truck-loads and train cars full of products.

From a consumer's vantage point there is one huge advantage, which is the ability to wheel your shopping cart past an RFID station and have every product accounted for without the need to take each piece out and scan it individually.

The downside of RFID tags is loss of privacy. In a very real way, everything you own or are carrying at any given moment will be knowable with a single quick scan of an RFID station device. Either from a vehicle driving by your house, or a scanner you walk near while out in public.