The Arusha Urban Water Supply and Sanitation Authority (AUWSA) is a public utility responsible for ensuring the reliable delivery of clean water to the people of Arusha, Tanzania. However, issues with water bill payments have emerged, which have impacted the AUWSA’s operations and ability to provide a sustainable and affordable water supply service. Late payment of water bills and revenue loss due to the outdated postpayment water metering technology are the major challenges faced by the AUWSA. To address these issues, a study has designed and developed an intelligent GSM-based smart prepaid water meter with improved prepayment methods. The prepaid water meter includes a custom user interface, water flow sensor, automatic token generator, and Unstructured Supplementary Service Data (USSD) application. Customers can easily register; load their water credits using Airtel Money, TigoPesa, or Mpesa; and check their usage. An LCD displays water usage information, and customers receive short message service (SMS) notifications via GSM technology when their tokens are about to expire or have been successfully loaded. Water flows, and the valve stops when credits are exhausted. The system’s administrator (admin) communicates with the meter remotely via a web interface developed using PHP, HTML, JavaScript, and SQL. This interface enables the AUWSA to monitor and manage the meter, which should help reduce revenue losses and improve overall efficiency. Future research should focus on predicting water leakage and cybersecurity using artificial intelligence (AI)/machine learning (ML) technologies.