Functionally, an RFID inlay consists of an antenna and a microchip.
The antenna drives tag performance and governs how well the tag will work in a particular application. Precision-designed to receive and broadcast RF signals, the antenna is made from a conductive material (such as silver, copper or aluminum), with each material producing very specific read and write characteristics because of the different chemical properties. Generally a copper antenna is slightly more expensive that aluminum or silver, but is more conductive and usually provides a longer distance read capability.
The antenna makes contact with an RF reader over a distance, which is determined in large part by the amount of metal, and by the size and shape of the antenna. Contacts attached to the microchip make the circuit between the microchip and antenna.
The microchip design determines the protocol and class of the tag's operation. Different microchips have different features that can also affect performance. RFID microchips contain circuitry capable of handling a variety of functions from power conversion to data storage and retrieval.