By Claire West

A ban on excessive charges for people who use debit or credit cards to buy goods and services comes into force today, putting an end to unscrupulous practices by business.

Under the new rules, traders will be expected to make sure that any payment surcharges are representative of the actual processing cost involved and they do not charge more than this. This will make the process fairer and more transparent for consumers and no longer result in hidden, expensive charges at the end of the payment process.

Surcharges are often cited in the airline sector but are also imposed by some retailers in other sectors, including rail, event tickets, cinemas, car dealerships and hotels. The Office of Fair Trading (OFT) estimate that consumers spent around £300 million on payment surcharges in 2010 in the airline sector alone.

The OFT’s consumer research conducted in 2010 found that 87 per cent of consumers objected to extra charges for credit cards and 91 per cent objected to extra charges for debit cards.

Consumer Minister Jo Swinson said:

“The practice of excessive payment surcharges has been ripping off consumers for far too long. They are fed up of thinking they will be paying a certain price for goods only to find out towards the end of the process that the final price is much higher.

“I am delighted that the ban will stop retailers from cashing in by charging add-on fees that simply do not reflect the real cost of processing the payment. Consumers will be less likely to get nasty surprises as they will have a clearer and more transparent breakdown of what they are paying for.”

Richard Lloyd, Which? Executive Director, said:

”Over 50,000 people supported our campaign to end rip off surcharges so we're pleased the government is implementing this ban.

"For it to be effective there must be a tough enforcement regime and companies must play fair and not pass costs on to customers in other ways. We will be monitoring the ban closely and want people to tell us about surcharges they think are excessive.“

Micro businesses and business start-ups will be exempt from the regulations until June 2014, when the directive comes into force. This will allow them more time to prepare for the ban.