A transponder chip is found in the majority of vehicles from 1995. This is normally a passive immobiliser system (which means the immobiliser auto arms) within a predefined time after the ignition has been switched off. Once the vehicle immobiliser has activated the vehicle will not start again until it see a correct transponder.
Transponders can be found in the simplest of keys, so a key without buttons transponders are found embedded in the plastic key head
The transponder does not normally need a battery to work, as the transponder in the key is normally powered by the vehicle’s Ariel (receiver) which emits a electromagnetic field of energy, the copper windings in the transponder absorbs the energy and powers the transponder.
In the simplest of systems the transponder then emits an alphanumeric string of code, this code emitted is then compared to a code stored in the vehicle ECU or Immobiliser System and if they match then the vehicle will start.
More complicated systems also exist, where the transponder alphanumeric string is encrypted with a secret password that is only known by the vehicle and the transponder which needs to be correct before the alphanumeric string is emitted.
Some transponders hold further details including the vehicles VIN Number, Mileage, Key Number, Pin code and various other vehicle data
It is becoming more common for transponders to be pre-coded with unique data specific to a particular vehicle. Without this specific data the transponder will not code to the vehicle. In some cases this data can be learnt from the vehicles immobiliser system and a transponder pre-coded in other cases the transponders\keys need to be ordered specifically for the vehicle it is being programmed too.
When programming a transponder into a vehicle, it needs to be the correct type and in the majority of cases can only be done using diagnostic equipment. Often in order to program a new transponder you need to enter a security pin code into the diagnostic equipment.