Indoor location technologies compared: RFID

Radio frequency identification, commonly known as RFID, is a form of wireless communication that uses radio waves to identify and track objects. RFID takes the barcoding concept and extends it with more three-dimensional information and active tracking capabilities. It is a hugely popular system in distribution, logistics and inventory management for the ability to identify many items at once without direct line-of-sight.

How it works

An RFID system is comprised of tags, readers that communicate with each other using radio waves and reader control & application software. RFID systems are broadly categorized as Passive or Active. Passive systems are characterized by tags that are powered by the readers, meaning they do not require a power source. Active systems have more expensive, battery powered tags that broadcast their own signal at a range up to ~100 meters.

There is wide variability in the cost and functions of RFID systems based on the different types of tags and readers. It is unlikely that we can do justice to all variables within an RFID solution, but we will discuss the main variables and trade-offs.


An RFID tag is comprised of a chip (integrated circuit) that stores identifying data and antennas that collects energy and channels it to the chip to turn on. The tags' antennae are variable for the applications and can largely dictate how reliable the tags are.

RFID systems generally operate on one of three frequencies described in the table below. The frequency impacts the tag read speed, reliability (sensitivity to interference) and cost.


An RFID reader is the device that provides the connection between the tag data and the enterprise software that needs the information. The reader communicates with RFID tags that are within its field of operation, capturing data from them and passing it to a computer for processing. Like tags, there are many types of readers that impact their capabilities and cost.

Source: AMI; Simple Cost Analysis for RFID Options. Oct 2013

Accessibility: Low-Medium (2)

The very thing that makes RFID systems powerful, also means it is one of the more difficult solutions from an accessibility standpoint. Deploying an RFID system necessitates multiple actors and many different components. Typically, installing a system requires basic hardware-including tags, readers and reader control and application software. There are several great vendors out there, but putting a program in place will require significant scoping and planning upfront as well as new infrastructure on both the sender (tag) and receiver (reader) side. (-2)

Furthermore, a common theme with other location solutions is the inherent compatibility with mobile. While it is possible to download software or add attachments to turn a mobile device into a reader, it is not an innate capability. RFID requires hardware/firmware that can process signals at specific frequencies, and to date, the major smart device manufacturers have decided that the customer value does not justify the cost or complexity of building it in. (-1)

Accuracy: Very High (5)

RFID accuracy varies by the type of tag, antenna and readers used, but it is possible to identify up to 1,000 tags per second at nearly 100% read rates. The main factors impacting accuracy are:

Because of the maturity and range of options available with RFID, it is possible to make almost any use case work (for a price of course).

Security: Medium - High (4)

Thanks to standard IP network security solutions, IP communication between RFID readers and the network is secure. The only real threat to RF communication is between the tags and readers. Unlike beacons which simply send a signal with a beacon identifier that effectively says "I'm here!", RFID is actually transmitting data related to the product (the EPC or the Electronic Product Code). Data security threats are therefore present in the form of rogue/clone tags, unauthorized riders, and side-channel attacks (interception of reader data by an unauthorized device).

Since UHF RFID operates on a single global standard (Generation 2), some security measures have been built into all tags operating on this frequency, including disguised EPC number and "kill commands" that allow operators to deactivate tags so they don't send data. However, RFID has received some criticism for weak encryption, password protection and lack of tag or reader identification. (-1)

RFID security comes under a great deal of scrutiny probably because, through the use of NFC applications (read more below), it has increasingly become a go-to technology for payment and secure ticketing solutions. The Generation 3 UHF RFID standard is expected to release improved security measures.

Costs: High (2)

Because RFID solutions themselves are highly variable, so too is the cost associated with them. While the cost has come down in recent years (corresponding to an increase in RFID use), high-volume transactions still make for the best business case.

For inventory unit level tracking, RFID is without question the cheapest automation solution out there. Passive tags can cost as little as 1¢ and some ultra-high frequency reader systems can process 1,000 tags per second.

If asset tracking is only needed at the large object level (e.g. equipment or cargo containers), BLE beacon solutions begin to be more cost-effective. The cost of an Active RFID tag is about on par with a beacon and they achieve similar battery efficiency and signal levels. Because Active RFID tags may operate on lower frequencies (~900 MHz) they may have a slightly lower risk of signal interference. However, the reader infrastructure for Active RFID is much more expensive. A single reader may cost up to $1,500 whereas an inexpensive smart device (as low as $50) may act as a reader in a BLE system. (-1)

Similarly, RFID systems for indoor navigation and location analytics are effective but the infrastructure can be extremely expensive. A 3,000 square foot space may have a signal zonal reader ($1,500) with several rack/room locators ($150-200 each) depending on the level of precision required. The same space can be "fingerprinted" using beacons for somewhere around $500-$850 and possibly less if it is already well-fitted for WiFi solutions. (-1)

Finally, while RFID tags can be extremely cost-effective solutions for large volume objects, for people tracking, they still represent an incremental cost to the business where solutions like WiFi and Beacon are leveraging consumer-owned infrastructure (e.g. mobile phones). NFC systems (discussed below) are a type of RFID, conveniently built into most Android devices and great for payment and ticketing applications. (-1)


Best for anything that needs to be tracked at an item level or where some manual authentication is desirable. RFID's ability to process thousands of items in seconds at high accuracy is unbeatable. Additionally, for applications where some human authentication (e.g. touch payments), is desirable, RFID is a great inexpensive option.


We debated including NFC as a separate category because it is actually just a form of UHF RFID. However, given the popularity of NFC and rise of it for use in consumer applications like payments and ticketing, we thought it is worth a brief discussion.

NFC is most commonly known for its use in payments and transport ticketing (think about your subway smartcard). As a form of passive RFID, it is highly energy efficient - creating its own power when in the presence of an NFC-enabled smart device. It can be used on one-way communication (tapping a smart card to a computer terminal for payment) or two-way communication (exchanging data between devices). However, per its name, NFC is a 'near-field' communication system meaning it only works within a 10cm range. The table below represents some of the pros and cons of NFC systems

  • Highly energy efficient and highly accurate
  • Consumer controls timing and engagement with an NFC tag - generally preferable for secure transactions
  • With release of iPhone 6, now supported by both Apple and Android
  • Inexpensive - $0.10 - $0.60 per tag
  • Works with any contactless payment terminal
  • Coverage radius is very small -10cm or less
  • Consumer controls timing and engagement with an NFC tag - location analytics or room positioning require tags fixed to stationary objects and consumer-led action
  • Not supported by any Apple products prior to iPhone 6

Like all contactless data systems, NFC poses some major security concerns. To combat this, smartphone manufacturers like Apple have built additional security mechanisms into the chips that go beyond the security of traditional UHF RFID (for example, transmitting random one-time use codes in lieu of credit card numbers).


Best for secure one-to-one transactions between a consumer and another entity (payment, transport ticketing). However, for applications requiring location analytics, indoor navigation or proximity-based communication, it is likely that that supplementary technologies will need to be used.