A low-cost pre-paid system employing a symmetric key cryptosystem, namely 3-DES algorithm is developed in this work. The proposed system consists of terminals and smart cards that both contain code-protected microcontrollers. Certain bits of a 3-DES key are updated for each session between the smart card and the terminal. The constant part of the key is loaded to both the smart card and the terminal before utilization in the initialization stage. Thus, a unique key for each session is generated. While there is only a very small probability that the 3-DES can be broken by brute-force attack, the proposed system provides outstanding security. The low-cost of the proposed system is an important advantage. © 2005 IEEE.