NZ Wheel Clamping refunded Mr Raynel's fee the next day - but the company says no permit was displayed and is considering laying a complaint against police.
Mr Raynel, who lives alone at Elmwood retirement home after his wife died seven months ago, said the wheel clampers could not be reasoned with.
"I got a real shock, having my bundle of groceries to put in. I said, 'Look, my card is on my dashboard, come and have a look."'
Emma Diack, 32, joined a large crowd of angry bystanders who tried to pressure the clamper to let Mr Raynel go without a fine.
"It was just a bizarre situation ... he is 88. It was night as well ... and here he is standing in a carpark, it was freezing, and there was no way this guy was going to take [the clamp] off.
"[The clamper] said, 'Well, I've already knocked [the fine] down from $180 to $80.' It was like, are you absolutely serious?"
Several people offered to remove the wheel and put their own spare tyre on the car, and a hat was passed around and enough money donated to pay the fine.
But Mr Raynel declined the offer and paid the $80 himself, before police turned up and told the clamper to refund his money.
NZ Wheel Clamping owner Gordon Ward was called to the carpark but refused to give any refund.
Yesterday the company's group manager, Sean Hika, said agents did not have the authority to take a clamp off without payment or give on-the-spot refunds.
"What I'm hearing is that the police turned up but wouldn't contact the call centre ... all the negotiation and discretion is held with the call centre, not the people on the ground."
Mr Hika said his agent had photos to prove no permit was displayed on the dashboard.
The company had requested a meeting with the police area commander and were considering laying a complaint.
"The police showed up and got involved in a civil matter. And they threatened to arrest my guys on a civil matter - a completely over-the-top reaction.
"[Police were] completely wrong in terms of the law. The guys were doing their lawful duty ... we clamp cars that park outside the rules of the carpark."
Last month Mr Hika contacted the Herald to complain of a "mob mentality" that had seen his workers spat at and threatened with violence.
The Herald was contacted by more than 60 people with complaints against the practices of NZ Wheel Clamping staff after a series of articles on wheel clamping.
Consumer Affairs Minister Simon Bridges has met the company and others in the industry to draw up a voluntary code of conduct.