Which? said it is now time to turn the spotlight on unfair practices in the wider credit market.
Which? executive director Richard Lloyd said: “Today’s crackdown on the payday lending market comes not a moment too soon. Lenders must now start competing on price and treating their customers fairly.
“The regulator has clearly shown it’s prepared to take tough action to stamp out unscrupulous practices and they must keep the new price cap under close review.
“We want to see an end to excessive fees that also make it hard to compare different loans, including those charged for unauthorised overdrafts and credit cards.”
The new rules mean that people using payday lenders will see the cost of borrowing fall and those who cannot afford to repay their debt on time will never pay back more in charges than the sum they initially borrowed.
For all high-cost short-term credit loans, interest and fees must not exceed 0.8 per cent per day of the amount borrowed.
The Financial Conduct Authority (FCA), which oversees the industry, said the move will lower costs for most borrowers and ensure that charges are proportionate to the size and duration of the loan.
Default fees for borrowers who fail to repay on time will be capped at £15 under the measures, which are the latest in a string of clampdowns on the sector.
The new rules mean that if someone borrows £100 for 30 days and pays back on time they will not be charged more than £24.
Someone who borrows £100 but struggles to repay their debt will never pay back more than £200, including fees and charges.
Short-term lenders said the caps will lead to fewer people getting loans from a smaller group of lenders. They said that initially at least, the cost of a payday loan will generally be at or near the cap.
Wonga, Britain’s biggest payday lender with more than one million active customers, started capping the cost of its loans in mid-December in order to comply with the rules.
Stricter rules for credit brokers are also being applied from today. Concerns have been raised that consumers have often mistaken credit brokers for lenders.
Under the new rules, a firm will not be able to request a consumer’s bank details or take a payment without their explicit consent first.
Brokers are now required to state their role prominently in all advertising and consumers will have a 14-day right of cancellation where credit broking agreements are entered into as distance contracts, for example online.
Martin Wheatley, chief executive of the FCA, said the payday loan cap will “make the cost of a loan cheaper for most consumers”.
He added: “Anyone who gets into difficulty and is unable to pay back on time, will not see the interest and fees on their loan spiral out of control – no consumer will ever owe more than double the original loan amount.”