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Beacon Technology and RFID Tags: Similarities and Differences

Read Time: 5 minutes

Wireless technology has become a staple in our current society, to the point where we generally take it for granted. The extent of wireless capabilities is often outside of our awareness, even if we are familiar with some of the technology that it powers. Two technologies that may not currently be on your business radar are beacons and RFID tags. Though they share similarities, their capabilities can be used for unique purposes.

Technology is continually evolving and these two are no different. However, a basic understanding can help you determine how implementation could benefit your business. Here’s a look at the similarities and differences between beacon and RFID technology. 

Beacon Technology: Connect Your Business to the IoT

First of all, what is beacon technology? Beacons utilize Bluetooth low-energy (BLE) to connect with devices and transmit information in the form of small data packages. The beacons themselves are small, wireless transmitters that send out a signal to other Bluetooth-enabled devices in the vicinity. Once a connection is made, the beacon signals an app or another capable feature on the device to display a personalized message. 

Because beacons communicate with other internet-enabled devices, beacon technology is part of the Internet of Things (IoT). IoT beacon capabilities are more precise than location apps because they focus on a smaller target region or radius, such as a business establishment. BLE technology is also less expensive and more energy-efficient than standard Bluetooth, because it focuses on data transfer that is not continuous or large in size. Instead, once the connection is made and the corresponding messages are delivered, the beacon has done its job.

Uses of Beacon Technology

One of the largest benefits of beacons is their ability to help businesses communicate with their customers and provide a personalized customer experience. However, the use of beacons is not limited to customer interactions.

There are many beacon technology applications, including:

  • Process initiation or optimization, such as automating manufacturing processes;
  • Managing and monitoring IoT factory equipment, workers and operations;
  • Proximity marketing, such as notifying customers about special discounts and local offers, whether they are in-store or close by;
  • Providing information about the surrounding area (Historical, geographical, things to do, etc);
  • Tracking customer interaction and mapping online to offline behavior;
  • In-store navigation and beyond.

One example of beacon technology at work is in response to customer behavior at your physical business location. Your beacon could ping customers’ mobile app when they enter your store and let them know about the current special you are running or offer a coupon. The beacons could also provide users with an in-store map and help them locate the products they are looking for.

Historically, customers had to have a mobile app installed in order for the beacon technology to connect to their devices. This beacon app could be a business app, a third-party app, or a pre-installed feature on a smartphone. Over time, businesses have worked to open up the beacon experience and not require a beacon mobile app so that more users could get involved. 

However, a custom mobile app serves many uses and can provide a centralized location for customer interaction and communication. By funneling communication and advertising through your app, you can tailor and manage the customer experience. Additionally, you can direct users to additional information or resources.

While offering a personalized experience, beacon technology is purported to be very cost-effective, making it a favorable choice for businesses of all sizes.

RFID Technology: Microchips for Tracking

RFID tags are another wireless technology that utilize electromagnetic energy and broadcast radio waves to a nearby reader. Depending on the type of chip, they do so through battery power or by harnessing power from the RFID reader itself. 

Active or semi-active tags are more expensive as they need to supply their own energy. In comparison, passive tags do not need to supply their own energy in order to be read. This makes passive tags a cheaper option for RFID technology and they can be utilized for asset tracking and other disposable or temporary purposes. RFID tags can help businesses manage inventory and ordering as well as shipping and sales. They are used in animal chipping, both for livestock and pets, and can store owner and health information in case an animal gets lost. Some humans have even opted into RFID tagging, though the implications for human tagging is a highly-debated topic. RFID implants are typically placed in the individual’s hand, which can then be used as everything from a virtual business card to a key for electronic doors or a way to unlock devices. 

Another common use of RFID technology that users are most likely to be familiar with is powering instant payment. RFID chips can be built into credit cards or integrated into smartphones for easy purchasing. All customers need to do is tap their card or mobile device and they’re on their way.

Beacon Technology and RFID Chip Differences

Though both beacon technology and RFID chips utilize wireless technology, their main difference is how their capabilities are applied. The use of beacon technology is focused more on the transfer of information for action-oriented purposes, such as customer interaction or process automation. Businesses want to use beacons to draw in customers, capture and direct attention, make the sale, provide information and keep manufacturing processes running smoothly. 

In contrast, the purpose of RFID technology is more passive. RFID chips also communicate information, but their goal is for their signal to be picked up by a nearby chip reader rather than a smartphone or connected device. They store data about the good itself, such as pricing and product information. This makes them optimal for tracking products and providing efficient payment options.

However, both can be beneficial for manufacturing and the supply chain and can be used in tandem to optimize efficiency.

Beacon and RFID Technology Similarities

As with any technology involved in the transfer or storage of data, encryption and secure connections are important for both beacon and RFID technology. This will help to ensure that no one has the ability to tamper with the connection or get a hold of confidential or sensitive information. 

For beacons, the signal only communicates in one direction, so beacons do not receive information from customers’ smartphones or store data on the receiving devices.

Though standard Bluetooth-enabled devices are capable of receiving the transmission, the Bluetooth feature must actually be enabled in order for the signal to be received. 

While not a sweeping mode of advertising across all users, the benefit of utilizing BLE technology is that users have the opportunity to opt-out of the connection by simply turning their Bluetooth off. This non-intrusive technology solution respects both customer privacy and autonomy. Additionally, the ability to opt-in can help to drive conversion rates. However, it is important to ensure that someone attempting to hack the connection will be unsuccessful in gaining access. 

RFID chips also have the potential for their signal to be intercepted by another device. Though a secure connection is optimal for both, it carries more weight for RFID tagging due to the nature of the data being read. To protect against security threats, businesses have created wallets and cases to combat RFID skimming and protect personal information. Additionally, companies have limited the target range to read an RFID chip.

Choosing Which Technology is Right for Your Business

Perhaps a general way to sum up Beacon technology vs RFID tags is this:

Beacons transmit data with the goal of prompting an action while RFID tags transmit data in response to an action.

Additionally, businesses that implement beacon technology are more focused on making a connection with other devices, while those with RFID chips are focused on making a secure connection. 

Both serve useful purposes and it’s expected that this technology will continue to advance in the coming years. The beacon technology market size is projected to grow to greater than 25 billion dollars by 2024 and the RFID market is also well into the billions. With additional applications for chips and beacons every year, businesses would do well to consider these technologies in their business strategy.

If your business could benefit from technology or software consulting services, 7T is ready to help. We also specialize in mobile app and custom software development, so we can help your business develop an app that complements your beacon technology. If you are interested in process automation, we develop Customer Relationship Management (CRM) portals and Enterprise Resource Planning (ERP) software

Located in Dallas, 7T maintains regional offices located in Houston and Chicago. To discuss your development project, reach out to the team at 7T today.

Reach out to our team today!

Lacey Williams-McGhee

Lacey Williams is a marketing professional and Harvard graduate student living in the great state of Texas. When she's not working at 7T's headquarters, she can be found on the next flight to the Bahamas, hanging out with her husband and fluffy golden retriever, or studying! Lacey earned a B.A. in journalism from Baylor University. Sic 'em!


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