A method and system for providing alternative prepaid service when a serving Packet Data Service Node (PDSN) does not support prepaid or at least the type of prepaid (duration-based or volume-based) the user has subscribed to. The serving PDSN sends an access request to a Home Authorization, Authentication & Accounting Prepaid Server (HAAA/PPS) with an indication of its capability to support prepaid service and to terminate sessions based on requests from remote nodes. When the serving PDSN is neither capable of prepaid service, nor does it support session termination by a remote node, the HAAA/PPS determines that a prepaid session is allowed and supported in combination with a Home Agent (HA) for duration-based prepaid service. When the PDSN is not prepaid capable but supports session termination capability, the HAAA/PPS determines that any type of prepaid service can be allowed and supported by the HAAA/PPS in combination with the HA.