With the rapid advancement in wireless sensor networks, WSN based zigbee network has been widely used in controlling and monitoring process. ARM7 and Zigbee are used for Automated electronic toll management (AETM). The proposed system consist of three units namely Lane processing unit, Link unit and Mobile unit. Lane processing unit act as central database server and holds user information while link unit act as router and increases the coverage and RSSI of the received signal. Mobile unit fixed in the vehicle transmit the vehicle information such as reg no, owner name for authentication to lane processing unit. LPC2148 is an ARM7 TDMI based low power controller used in proposed system design. It is a 32 bit processor works on RISC architecture reduces the latency in processing data or command. Xbee transceiver is used for communication between these nodes and here xbee series 2 transceiver is used which has inbuilt 128 bit AES encryption to avoid any security attack or false data packet injection. To evaluate proposed system performance, issues related to packet loss ratio (PLR), traffic density are analyzed. This system greatly increases the response time than in traditional toll management system. © Research India Publications.