This information is excerpted from AMVA:

Microchipping of Animals FAQ

Q:  What is a microchip?
A:  A microchip is a small, electronic chip enclosed in a glass cylinder that is about the same size as a grain of rice. The microchip itself does not have a battery—it is activated by a scanner that is passed over the area, and the radiowaves put out by the scanner activate the chip. The chip transmits the identification number to the scanner, which displays the number on the screen. The microchip itself is also called a transponder.

Veterinarian scanning a dog for a microchip

Q:  How is a microchip implanted into an animal? Is it painful? Does it require surgery or anesthesia?
A:  It is injected under the skin using a hypodermic needle. It is no more painful than a typical injection, although the needle is slightly larger than those used for injection. No surgery or anesthesia is required—a microchip can be implanted during a routine veterinary office visit. If your pet is already under anesthesia for a procedure, such as neutering or spaying, the microchip can often be implanted while they’re still under anesthesia.

Q:  What kind of information is contained in the microchip? Is there a tra​cking device in it? Will it store my pet’s medical information?
A:  The microchips presently used in pets only contain identification numbers. No, the microchip is not a GPS device and cannot track your animal if it gets lost. Although the present technology microchip itself does not contain your pet’s medical information, some microchip registration databases will allow you to store that information in the database for quick reference.

Some microchips used in research laboratories and for microchipping some livestock and horses also transmit information about the animal’s body temperature.

Q: Should I be concerned about my privacy if my pet is microchipped? Will someone be able to track me down?

A: You don’t need to be concerned about your privacy. The information you provide to the manufacturer’s microchip registry will be used to contact you in the event your pet is found and their microchip is scanned. In most cases, you can choose to opt in or opt out of other communications (such as newsletters or advertisements) from the manufacturer. The only information about you contained in the database is the information that you choose to provide when you register the chip or update your information. There are protections in place so that a random person can’t just look up an owner’s identification. 

Remember that having the microchip placed is only the first step, and the microchip must be registered in order to give you the best chances of getting your pet back. If that information is missing or incorrect, your chances of getting your pet back are dramatically reduced.