The Government is to block firms from using "hidden" credit and debit card surcharges to ramp up the price of flights, concert tickets and other goods.

The move follows a call by the Office of Fair Trading (OFT) for the fees, often added in the final stages of a transaction, to be banned for debit cards.

But this goes further, banning profiteering on all forms of payment by the end of 2012. Businesses will only be able to charge what it costs them to process the transaction.

The issue was initially raised by a super complaint from consumer lobby group Which? which prompted the OFT to act.

What do firms charge?

Ryanair charges £6 per person, per flight to pay if you do not hold its own prepaid Mastercard, though the airline claims this is not a surcharge.

Many of its budget airline rivals, such as Easyjet, also impose similar fees.

The OFT estimates that, in 2010, UK consumers spent around £300 million on payment surcharges in the airline sector alone.

Meanwhile, the Trainline charges £3.50 for a credit card transaction.

The ban extends across most retail sectors, not just transport where the problem is at its worst.

Treasury Minister Mark Hoban said consumers should be able to see "upfront" how much they will have to pay.

A European Union directive will ban businesses in many sectors, including airlines, from imposing above-cost surcharges on any form of payment from mid-2014 but the Government intends to act faster than that timetable.

It is to launch a consultation on the matter in the new year, with the goal of banning surcharges by the end of 2012.

MoneySavingExpert.com creator Martin Lewis says: "This is great news, especially as debit and credit card payment fees are to be banned quicker than the EU was already requiring.

"Plaudits to Which? for a great campaign."

What's the true cost?

Which? estimates that when paying by debit card, the cost to the retailer is 10p to 20p.

The cost of a credit card charge to a retailer is calculated as a percentage of the value. Which? estimates the real cost of processing a credit card transaction is no more than 2% of the value of the purchase. So £2 on a £100 transaction.

Hoban says: "We want consumers to be able to shop around. They have a right to understand the charges they may incur up front and not be hit through a hidden last-minute payment surcharge.

"We're leading the way in Europe by stopping this practice. The Government remains committed to helping consumers get a good deal in these difficult times."

'Practice spreading'

The OFT found considerable evidence of companies using "drip pricing" practices for surcharges online, adding payment charges to the total price only after consumers have filled in a number of web pages during their purchase, and warn the practice is spreading.

Which? executive director Richard Lloyd says: "The Government's decision to ban rip-off debit and credit card surcharges is a huge victory for consumers.

"This announcement goes further than the OFT's proposals, finally putting an end to these unfair and excessive charges.

"Over 50,000 people supported Which?'s campaign to see these fees stamped out.

"While the law will come into force at the end of 2012, we want companies to be upfront and fair over card charges today."

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