Described is a system and method for encrypted communications. The system may include first and second transponders. The first transponder has a first memory arrangement that stores a first key. The second transponder includes a second memory arrangement and has an access to a second key. The first transponder generates a first message for delivery to the second transponder, and encrypts the first message using a randomization key to generate a second message. Then, the first transponder encrypts (a) the second message and (b) one of the a randomization key corresponding index using the first key to generate a third message. The second key may decrypt the third message.