The law will come into force on January 13 and will put to an end the common practice of 'surcharging' across the country.
A range of businesses, from takeaway apps to global airlines, charge people up to 20 per cent extra to pay using their debit or credit card.
The rules will also tackle surcharging by local councils and government agencies.
Economic Secretary to the Treasury, Stephen Barclay, said: "Rip-off charges have no place in a modern Britain and that’s why card charging in Britain is about to come to an end.
"This is about fairness and transparency, and so from next year there will be no more nasty surprises for people at the check-out just for using a card.
These small charges can really add up and this change will mean shoppers across the country have that bit of extra cash to spend on the things that matter to them."
Under current laws, which came into force in 2013, companies should only charge you what it costs them to process a card payment.
However, they should not be making a profit on these surcharges.
The new rules will scrap all these surcharges, including linked ways of paying such as PayPal or Apple Pay.
However, Guy Anker, managing editor of MoneySavingExpert.com has warned that some companies may raise prices to compensate for the new laws.
He said: "Scrapping card surcharges is good news, especially for the millions of consumers who would otherwise have been milked by companies who whack on unexpected charges at the end of the process – something that has been happening for years.
"With the cost of living rising anyway, people shouldn’t be hit with unexpected fees. While it will make it easier for consumers to compare prices, we expect some companies will raise prices for all to compensate for the loss, which could hit those who currently pay in cash or debit card."