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Is it because of antenna sizes? At 900 MHz a 1/2 dipole has a size of around 15 cm. That would be far higher for 125 kHz, so instead we use coils to power the transponder and use load modulation for the reverse-link.

Does the low frequency have any effect on reflection? Reflection is dependent on frequency, low frequency waves tend to "go through" materials easier so we would have a harder time reflecting those through the transponder antenna?

Are those the two main reasons?

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No, the reason for inductive coupling wins over EM waves for RFID systems is better efficiency at nearby distances. Inductive coupling is a much better way of transferring energy over a short distance. For (really) long distances, EM waves win the race over inductive coupling.

So, it has nothing to do with antenna sizes or reflection.

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When we speak of EM waves, we generally mean planar waves. This requires us to be in a region known as the far field. The far field is a certain distance away from the antenna, and thus gives us a minimum distance.

If we are talking about reactive (inductive or capacitive) coupling, we are talking about the near field. In order to be in the far field at low frequencies, we need very large distances.

The wikipedia article on this can be found here: Near and far field

In addition, we can extract more energy with reactive coupling (in essence, transformers operate this way, and they go to 99+ percent efficiency). Think of it this way - if EM is propagating, it spreads out as we move away. Our antenna can only cover a small area, and this area is a fraction of the total 'sphere' our EM wave is propagating away from. As a result, we can only capture a very limited part of the wave. This is seen in Friis transmission equation.

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When speaking about inductive coupling in RFID. The reader emits magnetic field and when tag enters the fild the chip varies its antenna resposnse which will result in a perturbation of magnetic field which can be detected by the reader. The strength of the magnectic field drops sharply with distance from the emitter. Hence inductive coupling is used in a situation where there is a involvement of short range operation. Also electromagnetic waves causes a lot of interference and other multipath problems. Inductive coupling works better for high and ultra high frequency operation.

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