I urge all retailers with payment terminals to read this article carefully

We've said in the past few columns, get the money first when doing any sort of monetary transaction involving a terminal. Dilip Patel found this out the really hard way.

A customer came into his Key Shop in Bromley, Kent, to deposit £450 on an Escape pre-paid Mastercard. He started counting the money as he did the transaction and found it £50 short. She said 'I'll get £50 from the car' and left, leaving the card with him. She didn't return.

He reported it and it then got extremely confusing, with Tuxedo (which operates the Escape card) not reporting back via PayPoint that it could stop the card, but with Escape staff confirming it had stopped the card and suspended the account.

The upshot is, Dilip has lost £450 and is aggrieved that PayPoint has not been helpful to him. How was this fraud perpetrated? Peter Brooker, spokesman for PayPoint, explains: "I'm sorry that Mr Patel feels that PayPoint hasn't helped him over this issue, but suspect that his perception is because he hasn't fully understood how this fraudulent transaction worked not that I blame him as it is complicated and the apparent discrepancy between what Tuxedo was telling him and what we were telling him.

"The Mastercard connection is that it is the 'acquirer' for the Escape pre-paid 'credit' card, just as your own credit or debit cards will have the Mastercard or Visa logos on them. Every card has its own rules for loading or transaction levels permitted.

"Put simply, the criminals used a duplicate card with two different identification numbers: the long number on the front of the card that was left behind, and another one on the magnetic stripe on the back. These are the same on genuine cards. By changing the number on the mag stripe on the bogus card, they know it will cause a delay, giving them time to take the cash from a cash machine using a genuine card with the same number as the mag stripe before it can be blocked. When a transaction is processed, we obviously record the number on the mag stripe which was swiped through our terminal and attach a transaction number.

"When Mr Patel called Tuxedo, he understandably gave them the number on the front but, as this wasn't actually used to make the transaction, Tuxedo correctly told him that this card did have £447 on it. However, when we checked using the card number that was actually used (on the mag stripe), it only had £7.32. Tuxedo was correct that it could stop the card with the £447 on it but that wasn't the card which had been used at Mr Patel's shop. The cash will have been withdrawn from the other card within minutes of the woman leaving Mr Patel's shop."

He adds: "The real issue here is that Mr Patel put through not just one but TWO transactions of £249 and £201 each BEFORE he had taken the money. The maximum top-up allowed on the Escape card is £250. From the very first training on the day a terminal is installed and again in bulletins, in our retailer newsletter and even on the daily end of day summary every retailer receives, we issue frequent reminders to our retailers that they must always collect and check money before carrying out the transaction, whatever it's for, and handing over the receipt."

PayPoint claims it did all it could to help Dilip via numerous phone calls and emails to Tuxedo, as well as lengthy phone conversations with him. The company also advised him to report the incident to the police.