ETC is all the rage! How far are we from truly cashless tolling on highways?

In early July, Alipay and WeChat announced the launch of a free ETC service. As the sweltering summer sets in, the ETC craze has also swept across the country. This phenomenon, which first emerged years ago, has suddenly become a hot trend—so much so that it’s even been hailed as the “strongest growth opportunity.”

The server is vying for new customers.

ETC, also known as the highway electronic toll collection system, enables vehicles to pass through toll stations without stopping. It is a fully automated toll collection system that enables vehicles to pass through ETC‑dedicated lanes without stopping, by communicating between an onboard electronic tag and microwave equipment installed in the lane.

An electronic tag (OBU) is an onboard device that stores vehicle information and communicates via microwave with dedicated equipment installed on the toll lane. The electronic tag must be used in conjunction with an IC card. In addition to the OBU, another common term in the ETC system is RSU, which refers to the antenna array mounted on the gantry at toll stations.

ETC is not a new concept; China introduced this system as early as around 2010. However, over the years, it has remained neither particularly popular nor particularly unpopular. Recently, this concept has once again been frequently appearing on numerous social media platforms.

“There are countless expressways, but only one lane remains for manual tolling—no ETC? You’ll be stuck in two lines of tears…” A reporter spotted such promotional messaging in the social media feed of a bank employee. Over the past two months, banks have been rolling out a series of ETC‑related promotions—such as waiving equipment fees and offering online registration—to attract new customers. Moreover, those who sign up for ETC starting July 1 will also enjoy discounted tolls.

Traditionally, banks have been the primary facilitators of ETC services. With the entry of two internet giants—Alipay and WeChat—in early July, competition in this market has intensified.

On July 1, Postal Savings Bank partnered with Alipay to issue ETC cards. Alipay offers free ETC application, with nationwide coverage and free shipping on the device. On the same day, vehicle owners can directly apply for ETC through the WeChat mini-program or the city services app, enabling nationwide networked tolling and enjoying WeChat Pay’s “pass first, pay later—no top-up required” experience, while also being able to issue electronic invoices online.

Behind it is the favorable policy winds.

This year’s Government Work Report proposes that, within two years, toll stations at provincial borders on national expressways will be largely eliminated, enabling seamless, non-stop toll collection.

In June this year, the National Development and Reform Commission and the Ministry of Transport jointly issued the “Implementation Plan for Accelerating the Promotion of Electronic Toll Collection (ETC) Services on Expressways” (hereinafter referred to as the “Plan”), which set out a clear timetable for advancing ETC deployment.

The Plan states that by the end of this year, the number of ETC users nationwide will exceed 180 million, with ETC coverage achieving full penetration at all highway toll stations. ETC lanes will become the primary toll‑collection lanes, enabling trucks to pass through without stopping, and the rate of non‑stop, fast toll collection on highways will reach over 90 percent. All manual toll lanes will support electronic payment methods, including mobile payments. Meanwhile, in the parking sector, the use of ETC devices will be strongly encouraged: by the end of December 2020, ETC services will be fully available at major transportation hubs such as airports, railway stations, passenger terminals, and port terminals; the application of ETC in residential communities and tourist attractions will also be promoted, with ETC‑equipped vehicles receiving a toll discount of no less than 5 percent.

The NDRC’s latest directive stipulates that, effective July 1, 2019, in addition to strictly implementing the basic toll‑discount policy of at least 5% for ETC users, all ETC‑equipped vehicles traveling within the region will receive the same uniform basic discount. It also encourages localities to tailor and refine differentiated tolling policies for expressways, while further enhancing preferential treatment for ETC users. Issuing institutions are encouraged to establish ETC user reward-point systems, offering ETC customers exclusive benefits, gift‑redemption perks, and a variety of other incentives.

Pioneering smart transportation consumption?

Currently, in a wide range of everyday payment scenarios, Alipay and WeChat have become indispensable tools for many consumers. However, in the realm of expressway tolling, the situation is quite different. Take ETC as an example: even at the very outset of the ETC project, banks had already launched related services. After more than a decade of collaboration, the partnership model between banks and ETC has become relatively well-established.

With the introduction and strengthening of numerous policies, Alibaba and Tencent are poised to seize a golden opportunity for pioneering new markets. Industry insiders note that Alibaba and Tencent are far from the only third-party payment providers vying for this market share; objectively speaking, the convenience of these firms’ ETC‑processing procedures could attract a substantial influx of new users. And once a user is linked, it is the vehicle owner’s data profile that these platform operators value most. With access to user profiles, it becomes possible to offer car owners tailored recommendations for services such as vehicle maintenance, car washing, and refueling—each of which represents additional value for payment institutions.

This has, in turn, prompted certain changes in the service‑processing procedures for the project. Some car owners have reported that, at present, it’s far more cost-effective and convenient for new users to sign up for ETC than for existing ones. Even through traditional bank channels, new customers can now access a range of online services and perks, whereas switching or modifying an account as an existing user involves much more hassle.

The ETC equipment market is experiencing rapid growth.

As discussions around ETC continue to gain momentum, the previously overlooked ETC equipment market is also coming into the spotlight.

In a recently issued notice, the Ministry of Transport clarified that, starting next year, highway tolls will be collected in accordance with the new vehicle‑type classification standard. Furthermore, ETC single‑card users—those who have not installed an on‑board unit—will no longer be eligible for toll‑discount policies.

This policy has sent the ETC equipment market into a frenzy of excitement. A journalist’s investigation revealed that, owing to China’s qualification‑based regulatory framework for the ETC market, provinces and municipalities typically require ETC products to pass testing by the Ministry of Transport’s Traffic Engineering Supervision and Testing Center—new products being certified by Beijing Zhongjiao Guotong Intelligent Transportation Systems Technology Co., Ltd. Moreover, due to discrepancies between domestic and international standards and varying customer requirements, foreign firms face significant barriers to entering this sector. As a result, the ETC industry is characterized by high market concentration, with a small number of leading companies commanding the vast majority of market share.

At present, in this sector, the three major companies—Wanjie Technology, Jinyi Technology, and Juli Technology—account for 80% of the domestic ETC equipment market. Among these, Wanji Technology has accumulated core technologies including data acquisition and processing, multi-lane free-flow traffic management algorithms, OBU positioning, and RF and signal processing. In 2018, the ETC business generated total sales revenue of RMB 301 million, up 36.27% year over year, accounting for 43.54% of the company’s full-year revenue. Jinyi Technology’s product portfolio covers a wide range of ETC application scenarios, with highway‑related ETC equipment accounting for more than 95% of the company’s annual revenue.

The second half of the year may see a surge in promotional activity.

At present, provinces and cities are accelerating the development of ETC infrastructure. Taking Guangdong Province as an example, the Guangdong Provincial Department of Transport has issued the “Implementation Plan for Deepening the Reform of the Toll Road System and Abolishing Highway Provincial Boundary Toll Stations in Guangdong Province” and the “Overall Technical Plan for the Project to Deepen the Reform of the Toll Road System and Abolish Highway Provincial Boundary Toll Stations in Guangdong Province.” Meanwhile, all 131 expressways across the province have completed the construction‑drawing design and work‑plan formulation for ETC gantry systems. According to the schedule, most sections will begin gantry installation in July.

However, a set of data indicates that achieving full ETC coverage this year will not be easy. According to data released by the Ministry of Transport, as of the end of 2018, the national vehicle stock stood at approximately 240 million, with small passenger cars surpassing 200 million for the first time. Among them, ETC users number only 76.56 million, accounting for just 31.9%. By the end of December 2019, the number of ETC users nationwide had exceeded 180 million. In other words, over the course of a year, the number of new ETC users nationwide must exceed 100 million.

Specifically in the context of ETC applications, recognition technology is a critical component. At present, this issue is primarily addressed through methods such as optical license plate recognition and radio-frequency identification. Among these methods, optical license plate recognition requires relatively low investment, but its accuracy is only 80%–90% and it is easily affected by adverse weather conditions such as rain, snow, and thunderstorms. However, RFID technology entails higher capital investment, achieves an identification accuracy exceeding 99.9%, and is unaffected by weather conditions. From a performance standpoint, both CPC‑card‑based and license‑plate‑recognition solutions serve as temporary interim measures; yet, given the substantial upfront costs of RFID and the relatively slow pace of its deployment, these options remain less viable in the long term.

Some netizens have also shared online scenes of ETC lanes backed up while the manual lanes flow smoothly, raising concerns: “With a sharp surge in vehicles using ETC lanes, could this impact communication efficiency?” In response, a reporter consulted relevant technical experts and learned that multi-lane free-flow ETC is currently the most advanced ETC solution, capable of truly enabling seamless, contactless toll collection. After a vehicle completes pre‑transaction at the ramp’s free‑flow antenna and is subsequently verified at any lane at the toll plaza exit, it can proceed directly. The system supports OBU mobile payment and eliminates the need for high‑definition video gantries, increasing vehicle throughput from 20 km/h under single‑lane ETC to 50 km/h. At present, some expressways have already piloted this scheme, and with policy support, the second half of the year is likely to see a surge in its widespread adoption.