Why does NFC fail on metal?
A conductive surface behind a tag develops circulating currents that oppose the reader field and shift the tag away from the frequency it is tuned to. The result is almost always a total failure rather than a weakened read. Tags made for metal include a ferrite layer that separates the antenna from the surface.
What actually happens
The intuition most people bring is that metal blocks the signal, like a wall blocking light. That is not what happens, and the difference matters because it explains why the failure is so absolute.
A changing magnetic field passing through a conductor induces currents in it. Those currents circulate and produce a field of their own, opposing the one that created them. So the metal is not a passive obstacle, it is an active participant fighting the reader.
On top of that, the metal changes the electrical properties of the tag antenna sitting against it. An antenna is tuned to resonate at 13.56 MHz, and a large conductor a millimetre away shifts that resonance somewhere else.
Why it fails completely
Two effects stack, and both push in the same direction. Less energy reaches the tag, and the tag is worse at absorbing what does reach it.
Since a tag needs a threshold amount of energy to boot at all, the combination usually pushes it below that threshold in one step. There is no intermediate state where the tag reads slowly or intermittently. It works on the table and does nothing on the machine.
Which is precisely why this failure is so often misdiagnosed. A tag that stopped working the moment it was applied looks like a faulty tag, and peeling it off proves it was fine all along.
How on metal tags solve it
By inserting a thin layer of ferrite between the antenna and the surface. Ferrite is magnetically permeable and electrically resistive, so it guides the field along itself rather than letting it plunge into the metal and generate currents there.
The tag is then coupling with the ferrite rather than fighting the metal, and the resonance stays where it belongs. The cost is thickness, a few tenths of a millimetre at least, and money: on metal tags are markedly more expensive than ordinary stickers.
They also work perfectly well off metal, so where a deployment mixes surfaces, standardising on the on metal version removes a whole class of field problem for a modest premium.
What does not work
Simply lifting the tag away from the metal with foam or cardboard helps a little and rarely enough. The tag has to be far enough that the metal no longer interacts, and at that distance the phone usually cannot reach the tag either.
Making the tag larger does not help, because a bigger antenna over metal is a bigger antenna being detuned.
Turning up the reader is not an option and would not help if it were. The problem is not a shortage of field, it is a field being cancelled locally.
In practice
Assume metal unless you have checked. A laptop lid, a machine housing, a fridge door, the inside of a car, a metallised label, a card with a metal core, a phone case with a magnetic mount plate: all of these behave as metal for this purpose, and several of them are not obviously metallic to look at.
Test one tag on the actual surface before ordering a thousand. It costs a minute and it is the single most reliable way to avoid discovering the problem after application.
Frequently asked questions
Will a small amount of metal nearby cause a problem?
It depends on how close and how large. A metal screw a few centimetres away is usually harmless, while a continuous surface directly behind the tag is not. The rule of thumb is that anything large and flat immediately behind the antenna is a problem.
Can I fix an ordinary tag that is already on metal?
Not reliably. Adding a ferrite sheet between tag and surface can work if you can lift the tag without destroying it, which sticker adhesives usually prevent. Replacing it with an on metal tag is faster and more certain.
Do on metal tags read as far as ordinary ones?
Generally a little less, since the ferrite constrains the field. The trade is worthwhile because the alternative on a metal surface is no read at all.
Why does my card work in my hand but not in a metal cardholder?
The holder is doing exactly what a machine housing does, at a smaller scale. Metal cardholders and money clips are a frequent and unrecognised cause of contactless cards failing.