There are 2 chips inside the MagicBand.
The passive RFID chip receives power from the touch point. The passive chip is used for most functions like touch to enter (theme parks & resort room), touch to pay, FP+ entry and PhotoPass. The RFID cards perform these same functions. This passive chip will last virtually forever.
The active transmitter is battery powered. This transmitter will be used for interactive queue elements and character interactions. Even if the battery for this transmitter dies, the passive chip will continue to function.