Although payments using debit and credit cards are managed in the same way, most banks see more risk in sending a credit payment as opposed to debiting money directly from your account, and so they charge higher interchange fees.
The surcharges have been commonly added by businesses ranging from takeaway apps to global airlines on customers who pay by card or use other services such as PayPal.
Treasury Minister John Glen said: "It's completely unfair for someone to be hit by a hidden fee just before they are about to make a purchase, so by scrapping these rip-off charges we are helping to give power back to the consumer".
Companies will no longer be allowed to charge customers up to 20 per cent more for buying with plastic.
From today, Saturday 13 January, card surcharges will be banned across the United Kingdom both online and in stores, with companies unable to charge individuals more for paying by credit or debit card than other forms of payment.
Takeaway firm Just East has already drawn criticism for introducing a 50p "service charge" on all orders after previously levying a 50p surcharge on debit and credit card payments.
Consumer groups have welcomed the ban, but are urging shoppers to report any retailers they believe are flouting the new rules.
Gareth Shaw, from Which?
Cherry said it was "hypocritical" for HMRC to ban personal credit card payments while small firms had to absorb the costs. However, people will be wary if it results in price increases, minimum spend limits or even cards being refused by retailers.
"The government and regulator need to closely monitor the effectiveness of the ban - and the fees banks charge retailers for card payments - to ensure that it has the positive impact for consumers originally intended". Instead, businesses will have to take on the costs themselves.
The Federation of Small Businesses (FSB) said the proportion of small firms reporting a rise in costs was at a five-year high.
"Today's changes make insisting on payment by cash all the more appealing".
Up until now, firms were allowed to pass the costs of processing a card payment on to their customers.
The aim is to usher in a "revolution" to make it easier for consumers to compare products and thus boost competition in financial and other services.