Radio tags may yet be the death knell of shopping as we know it, writes Jim Colgan, but there's some way to go before they hit the supermarkets.

A mock supermarket in New York laid out the technology's promise. The shopper brings the basket near the computer terminal, waves the key-ring credit card, and leaves. No scanning, no swiping, no sales person in sight.

A perimeter alarm is triggered if any goods pass unpaid for. This demonstration at the National Retail Federation's X05 showcase last January showed high ambition for the tagging system called RFID, or radio frequency identification. Its name has been talked about since World War II and now RFID is a buzzword applied to an increasingly disparate range of activities.

Passports, luggage, cars, and pharmaceuticals all feature in the vision for wireless tagging and its enthusiasts say it will revolutionise the way we live.

But despite its potential, analysts say its future is far from guaranteed.

RFID is essentially the process of tags sending information to readers over radio waves. The data can be anything from a person's identification on a driver's licence to the thread width of a tyre, but its highest expectations for business right now are in retail.

US supermarket giant Wal-Mart is garnering praise for ushering in RFID development. In mid-2003, the company issued a deadline for its top 100 suppliers to institute tagging by the beginning of this year.

This spurred similar mandates by market leaders like Target and Best Buy - and European companies like Tesco and Metro Group.

Analysts say these ultimatums are driving global adoption. Research firm, In-Stat reported that worldwide revenues in tagging would increase from $300 million (€233 million) in 2004 to $2.8 billion in 2008 and a report by Forrester Research found that 43 per cent of US companies polled are "increasing their efforts" in the technology.

Its use is expected to reduce theft risks and make stocking more efficient since goods can be tracked from shipping to the shelves.This means consumers benefit from lower prices, proponents say, and an easier time navigating aisles.

"RFID has the potential of making the consumer supply chain be a living, breathing organism and data about everything will be available to everyone," says Larry Shutzberg, chief intellectual officer for Rock-Tenn, a packaging company investing in the technology.

Industry watchers compare development in RFID to the impact of the barcode. The first product sold with an electronic scanner was a pack of chewing gum in 1974.

In 1999, Price Waterhouse Coopers said the technology saved an annual $17 billion for the grocery industry.

Unlike barcodes, RFID tags do not need a line of sight. Readers can scan longer distances depending on the type of tag.

"Passive" tags draw on the reader's radio waves for power and since they don't need a battery, are the smallest and cheapest to apply. Despite the attention surrounding the technology, many companies have yet to be sold.

"I would hardly say it's mainstream," says Christine Spivey Overby, an analyst with Forrester Research.

"We have found a lot more companies are asking what RFID is, but it's still too expensive to roll out broadly across the supply chain," Overby added.

While early adopters espouse the long-term potential, many suppliers are merely complying with their customer demands, but analysts say that the mandate is the boost it needs to thrive.

The cost of tags is still a barrier to growth, with prices ranging from 20 to 40 US cents per item. Mark Roberti, publisher of RFID Journal, says that if the momentum continues, costs will go down and the benefits of tagging will increase.

"It's like the cell phone," he says. "If one person has it, it's not useful.

"If more people have it, it's more useful. And if everyone has it, it's extremely useful."

Another problem in RFID deployment until late last year, was the lack of a common standard. Last December, an international non-profit industry group called EPCglobal approved a next-generation protocol and this expected to attract more participants.

The Standards Body (NSAI) is planning to educate Irish companies about RFID at a conference later this month.

The dream of having every product with a wireless tag is also far away. Companies don't have the equipment to deal with that level of data, so investment is still focused on tagging pallets or cases of goods instead of at the item level.

In fact, industry observers say it's easy for companies to pour money into something that they don't understand.

"Some of these guys are getting ready to spend millions of dollars, without knowing why," Shutzberg says.

Still, there was similar wariness when barcodes were developed, he says, and RFID may see the same fate.

Along with the growth of RFID, concern is growing among privacy advocates. Critics of the technology worry about retailers retaining purchasing data if item-level tagging develops, but most criticism is levelled beyond grocery shopping.

The US state department announced that it would start embedding tags in passports starting this summer.

The aim is to prevent fraud and speed up immigration control, but critics say that it could unwittingly broadcast personal information to "rogue" readers.

"Anyone with a reader could tell from 10-30 feet away that there's an American in the vicinity," says Jim Harper, director of information policy studies at the libertarian think tank, the CATO institute.

"The government said the signal will be limited to inches, but commissioned a report to investigate these concerns."

Opponents like Harper say these fears show the downside of RFID adoption.

Others say society already benefits from the technology without problems in electronic car toll systems and building access cards.

"One thing I tell people concerned about privacy is that 20 million people carry an RFID tag on their person in their car every single day - it's never ever been a problem," says Roberti. Although he can conceive that there will be a self-checkout in his lifetime, he says that companies might find it too unrealistic.

But that doesn't mean there won't be equally impressive uses.

"It's like the internet in 1995. We're in the early days. Lots of smart people will come up with ways to use the technology that we haven't even thought about," he believes.

And some uses seem more outlandish than others. Last month, a man in Washington state implanted a tag in his left hand so that he could operate his car and household appliances.