ETC Cards are part of the automatic expressway toll system in Japan. If you drive on an expressway (高速道路) in Japan more than a few times per year, an ETC card will save you a bundle of money.

When entering an expressway from an interchange, there are always at least two tollbooths through which traffic flows. At least one is marked General (一般), and at least one is marked ETC. At the General tollbooth, cars come to a complete stop at the tollgate and take a ticket from a machine or, sometimes, a tollbooth attendant. When exiting the expressway, these cars will again choose the General tollbooth, and they will pay the expressway fare generally using cash inserted into an automated machine or handed to another tollbooth attendant. (I believe it is also possible to pay with a credit card at the General line--or even an ETC card if, for example, you have the ETC card but the car you are driving is not equipped with an ETC card reader.)

To use the ETC tollbooth, cars must be equipped with an ETC card reader device, and drivers must possess an ETC card which they have inserted into the reader device. When they approach the ETC tollgate, sensors will automatically detect the ETC card inserted into the reader device and let you drive through. When exiting the expressway, instead of paying the toll immediately, you'll pay it later, by one of the means described below:

ETC Card + Credit Card
This is the standard type of ETC card setup that most drivers in Japan use. They apply for a credit card from their bank, local department store, etc. The card must come from a Japanese financial institution or be linked to a Japanese financial institution. (That is--with some exceptions noted below--you can't use a credit card that you acquired in another country.) At the time of application for the card, they request an ETC card to be issued simultaneously. If/when their application is accepted, they are sent a shiny new credit card and a shiny new ETC card by post. The credit card and ETC card are two separate pieces of plastic, and the ETC card can only function for ETC purposes. When the ETC card is used at a tollgate, the tolls appear on the next month's bills of the associated credit card.

If you already have a credit card issued by a Japanese financial institution, but did not get an ETC card at the time, then it is usually possible to get an ETC card by calling your credit card company and asking for one to be issued. It will arrive in the post and work as described above.

ETC/Credit Combo Card
This option is virtually identical to the standard one above. However, in this form, the Credit Card and ETC Card are combined into a single piece of plastic. When inserted into an ETC Card Reader, it functions as an ETC card, but when you remove the card from the reader, you can also use it to make normal credit card transcations at stores, ATMs, and online.

Japanese drivers tend to have bad habits of leaving their ETC Cards inserted into the readers in their cars at all times, and some drivers also have poor door-locking habits. With an ETC/Credit Combo Card, this bad habit is significantly more dangerous, since a stolen card of this type can be used for normal credit card purchases and isn't limited to ETC use.

ETC Prepaid Card
This card type, officially called the "ETC Personal Card," is a prepaid version of the card for users who don't have credit cards. This makes it more accessible to foreigners, who sometimes have trouble getting approved for credit cards in Japan.

The official information about the ETC Personal Card is noted at this website:
ETC Personal Card
A summary of that information follows.

To apply for the ETC Personal Card, you must acquire a paper application from an interchange tollbooth or Service Area. (The above website lists all service areas that contain information desks and paper applications. It also lists a phone number from which you can have a paper application mailed to you directly.)

Along with the application, you will be asked to make a deposit of at least 40,000 yen. (The amount may rise depending on your expected expressway usage frequency.) To pay the deposit, you will be issued a "bill." Take the bill to any local convenience store and pay the cash. This deposit becomes associated with your ETC card, and can only be reclaimed by ending the ETC card contract and requesting a refund of the deposit. If you misuse your ETC card (for example, not having enough money in your bank account for the ETC toll to be withdrawn), you forfeit your deposit and your ETC card becomes invalid.

The ETC Personal Card must be associated with a bank account in Japan. Each month, the total expense you incurred from ETC tollbooths will be automatically deducted from that bank account.

The ETC Personal Card also has a 1,250 yen annual fee that will be automatically deducted from your associated bank account. Finally, there is a running campaign on ETC Personal Cards that lasts until March 31, 2011. If you apply for an ETC Personal Card before this date, your first year's annual fee will be waived.

ETC Card Reader
In addition to the ETC Card, it is also necessary to have an ETC Card Reader to use the special tollbooths on the expressway. A Card Reader is a physical device installed in your car that includes a slot to insert the ETC card and an antenna to communicate with tollbooths.

Card Readers can be as simple as a device you place on your dashboard and plug into your cigarette lighter for power. Simple readers like this cost under 5000 yen (verify?) and are sold at low-cost auto parts stores or Yahoo Auctions.

Many drivers, however, choose to have their Card Reader hardwired into the car. This setup is usually more aesthetically pleasing and doesn't hog the cigarette lighter. Hardwired systems come in "two piece" and "three piece" varieties. Two piece readers are a single device mounted on the dashboard (with the second "piece" being the ETC card itself). Three piece readers separate the antenna from the slot where the card is inserted. Three piece readers are the most "low profile" solution, since the antenna can be subtly mounted on the front windshield behind the rearview mirror and the card slot can be placed in an out-of-the way location under the steering column or inside the glove box.

ETC Card Readers can be purchased at car dealerships or auto parts chain stores like Yellowhat or Autobacs. The reader can be purchased with or without installation service. With installation service, the reader will cost from 13,000 to 25,000 yen, depending on the device you choose and the store's cost of labor. If the shop you visit quotes a high figure, it may be worth driving around to a few other places to find a better deal.

There is a lot of variety in the readers themselves. The big brands are Mitsubishi and Panasonic. Some ETC Readers only beep when you drive through a gate, other readers have voice prompts that read off the expiration date of your ETC card when you insert it and repeat back the amount of the fare you just paid when you drive through an ETC Exit Gate. Some devices have buttons to repeat the last voice prompt or to adjust the volume of voice prompts/beeps. Another thing worth looking at is how a card is ejected from the reader: Some readers have physical ejection switches, so you can take the card out even if the car is turned off. Other readers have electronic ejection buttons, so the card can only be removed when the car is turned on. Depending on your card use habits, you might want one type over the other. Finally, two-piece systems that sit on the dash are slightly cheaper than three-piece units that are hidden under the steering wheel, etc. And a three-piece unit can only be installed in cars with windshields at an angle of 45 degrees or less. This limitation is because of the angle necessary for an ETC Reader and the ETC Gate to communicate, and it means that trucks or other vehicles with windshields perpendicular to the road must choose a dash mounted ETC reader.

(Personal Experience: I had an ETC reader installed at my local Autobacs for about 16,800 yen. The whole process, from picking the box off the shelf and explaining I wanted them to install it, then driving away with a fancy new ETC reader, took about 50 minutes. When you buy the ETC reader, you need the registration documents (車検証) for your car, but you do not need to have the ETC card itself. Legroom in the driver's seat of my car is limited, so I had the reader installed on the passenger side. I could have chosen several other locations to install it, such as the glove box or, if the installation guy is feeling nice, even inside the armrest behind the transmission. Once the ETC reader is installed, you can use it right away. The same day I got mine installed, I borrowed an ETC card from a friend and took off on the highway. [I paid the friend back in cash later...])

Places to Apply for Credit Cards
<TO BE MOVED TO SEPARATE ARTICLE>
-apply at the bank where you hold an account, particularly well-received are accounts where your monthly salary is deposited
-lawsons
-aeon
-autobacs
-yellowhat
-search online for "credit card lawsons"--a bank site that introduces all of their credit card lineups that can be sorted by no annual fee, type of points received, etc.
-Rakuten Bank (formerly e-bank): requires an account at their online bank (http://www.rakuten-bank.co.jp/card/debit/index.html)

Alternative Credit Card acquisition means:
Some people have claimed it is possible to "transfer" cards from one country to another--for example, if you have acquired a credit card in the U.S., by calling the credit card company it may be possible to have that credit card reassociated with a bank account in Japan by providing your Japanese account information. The card then becomes a standard Japanese credit card, and you can apply to have an ETC card associated with it. (The specific mention I heard was a Chase Disney Visa card transferred to a Japanese address and a Japan Postal Bank account.)