The shift in transactions from paper money to plastic money has revolutionized the banking and payment sector in recent times. It was only a matter of time before further evolutions took place to refine and redefine the payment process. The future of banking technology lies with the refinement of RFID (Radio Frequency IDentification) technology and the conversion of normal plastic cards into smart cards embedded with RFID tags.

RFID technology was pioneered by Charles Walton, who is also known as the father of RFID technology, in the 1970s and 1980s. RFID is the wireless technology that uses radio frequency communication to uniquely identify, track and manage objects and collect and store data in electronic tags. RFID tags are intelligent bar codes that talk to a networked system to track items. It serves the same purpose as that of a barcode or the magnetic strip in ATM and plastic cards.

Tags are the heart of RFID system. These tags are paper thin which are electronically programmed with unique information. The size of the tag varies from the size of a grain of rice to that of a brick. The tag contains three components-the `chip', the `antenna' and the `enclosure'. The `chip' has a unique feature that stores data associated with the tag. From there the `antenna' receives the query signals from a tag reader and transmits the internal data from the chip. Tags are basically of two kinds. One is passive with no batteries and is generally of lower-cost. Passive tags are smaller in size and have virtually unlimited life-span. The other is active which has its own power source and costs more as compared to passive tags. Passive tags have unique identification number in them that cannot be changed and are transferred into a computer database in which the ID is associated with product characteristics; while in active tags, the information can be written, erased and rewritten. The advantage of active tags over passive ones is that the reader can be far away from the device and still get the signal.

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