A number of companies in the automotive, retail and logistics industry have started to become active in the use RFID technology and to launch respective pilot projects. Despite these commitments, the business case for RFID in these industries is still unproven. This thesis aims at providing a realistic perspective on the potentials of RFID that takes existing processes and practices into account. This thesis deals with the question of the effects the integration of RFID in the supply chain has on transaction costs. To answer this question, this thesis looks at the way how the implementation of RFID technology in the supply chain can reduce transaction costs. In the current literature RFID is hardly integrated in SCM models. RFID does not simply embed new hardware and software. It is about delivering innovation through enhanced business processes. Different forms of business collaborations emerge, mainly in order to benefit from the rich information availability. To examine the changes due to RFID in supply chain management a theoretical framework is needed. An appropriate framework is transaction cost theory.