Bat
Microbats make use of magnetoreception, in that they have a high sensitivity to the Earth's magnetic field, as birds do. Microbats use a polarity-based compass, meaning that they differentiate north from south, unlike birds, which use the strength of the magnetic field to differentiate latitudes, which may be used in long-distance travel. The mechanism is unknown but may involve magnetite particles.
Magnetoreception
For animals the mechanism for magnetoreception is unknown, but there exist two main hypotheses to explain the phenomenon.
According to one model, magnetoreception is possible via the radical pair mechanism. The radical-pair mechanism is well-established in spin chemistry, and was speculated to apply to magnetoreception in 1978 by Schulten et al.. In 2000, cryptochrome was proposed as the "magnetic molecule", so to speak, that could harbor magnetically sensitive radical-pairs. Cryptochrome, a flavoprotein found in the eyes of European robins and other animal species, is the only protein known to form photoinduced radical-pairs in animals. The function of cryptochrome is diverse across species, however, the photoinduction of radical-pairs occurs by exposure to blue light, which excites an electron in a chromophore. The Earth's magnetic field is only 0.5 gauss and so it is difficult to conceive of a mechanism, other than phase shift, by which such a field could lead to any chemical changes other than those affecting the weak magnetic fields between radical pairs. Cryptochromes are therefore thought to be essential for the light-dependent ability of the fruit fly "Drosophila melanogaster" to sense magnetic fields.