(Yicai Global) July 17 -- China will cancel highway toll-gates nationwide in two years, so competition is heating up in the electric toll collection market.

Banks, who are charged with doling out radio frequency identifications, offer large discounts in their ETC businesses to attract more high-quality customers, and may provide a subsidy of up to CNY300 (USD43.6) in one deal, Yicai Global has learned.

Banks generally give ETC clients free RFIDs, highway passes or refueling tickets worth more than CNY100 and a 5 percent to 10 percent discount on tolls, Yicai Global found based on a survey of over 20 banks. However, all subsidies require clients to link their ETC RFIDs to credit cards rather than debit cards.

An RFID costs between CNY75 (USD11) and CNY80 and a bank tips a staffer CNY50 to CNY150 for closing one ETC transaction and gives the client a pass or refueling tickets, so it shells out about CNY300 on one ETC transaction, bank employees said.

Banks are pulling out the stops to promote ETC because vehicle owners have strong spending power and will frequently use their credit cards once linked to ETC to enhance their loyalty to banks and drive the growth of their savings and loan businesses, an unnamed vice president of an urban commercial bank told Yicai Global, adding CNY300 is not much compared with the cost of selling one credit card offline.

China will largely cancel highway toll-gates at provincial boundaries and replace manual tolling with ETC, the country's government work report for this year announced. The nation had about 84 million ETC users as of May, but this figure will go up to 180 million if ETC completely replaces manual tolling, so a huge spread exists, Minsheng Securities calculates.

As competition in the ETC market dials up, the China Banking Association held a meeting last week in which it asked banks to exercise restraint to avoid excessive competition and stop subsidizing their ETC business to stop a free-for-all in the market, but "no bank is willing to pass on these high-caliber customers," the president of a smaller bank told Yicai Global.

Editor: Dou Shicong, Ben Armour