The word is Apple has constructed iPhone prototypes that are equipped with Radio Frequency IDentification or RFOID for short reports an article over on the iphone blog.

Apparently RFID broadcasts a signal which can be read over a short distance to process financial transactions along with determining identity and in more futuristic concepts where mobile phones can automatically discover and connect with another handset via their tags.

This means one could simply swipe their iPhone to pay for goods and services and you can keep track of tagged items. Shipping firms and retailers already use RFID to track packages much like barcodes.