My daughter has a sorrel gelding. He was fairly expensive, and it was suggested to us that we tattoo or brand him. My daughter does not really want him branded. Tattooing kits are available through vet supply catalogs and can either be applied by a veterinarian or by the horse owner. The downside regarding lip tattoos are that they are not visible, they can fade with age, they can be altered and many times they are not readable due to mottling on the horses lip.
Microchips are tiny implants that are usually put under the skin on the horse's neck.
There are several microchip manufacturers. Because of this, if a horse is stolen that carries a microchip that was manufactured by Company A and the particular slaughterhouse that they end up at has a scanner manufactured by Company B, this horses microchip will not be read by that particular scanner. There is also the problem of possible duplication of the identifying numbers on the chip depending on who has inserted it. A few other problems are that microchips can be removed and microchips can also be implanted by anyone with the money to buy the chip set-up. This is a great for someone wishing to identify their own animals - but a horse thief can also implant a microchip very easily as well.