Radio Frequency IDentification - The use of radio waves to transfer data wirelessly between a transponder (such as a plastic card) and a transceiver, for contactless access like "proximity" door-access cards, supply-chain tracking tags, shipping containers, luggage tags, livestock, motorway toll collections, an so on. Passing the aerial in the card though a magnetic field can generate an electrical current with sufficient power for the chip to transmit a fixed message a short distance. Some cards have an active emitter that uses an internal power supply and can transmit signals up to 100 metres. These transmissions can (and should) be encrypted, but this adds to the cost of a card (up from about $1, to over $5).

Source: http://identityaccessman.blogspot.com/2006/08/identity-dictionary.html