This announcement describes a rather sophisticated technology that delivers nthe same information that any retail clerk can capture today. Using stolen credit card numbers is a risky business, and the ability of the credit card companies in detecting fraud and locating criminals is quite real.
Retail clerks are not lone bandits. Retail clerks are employees of companies which have a strong interest in keeping their reputation squeaky clean (or risk losing business and welcoming lawsuits). Yes, there is no absolute guarantee that clerks will not do something bad anyway, but there is some self-regulation in that scenario because someone involved has a strong investment in the community. A lone bandit writing difficult to detect viruses scamming for credit card numbers all over the net does not have the strong investment in the community to preserve or protect. You wouldn't give your credit card to some random punk on the street, would you? However, you have no trouble giving it to a reputable store. Why? For exactly the same reason.
Of course, since Federal law requires the credit card companies, not the user, to pay the costs of fraud, First Virtual's entire premise is a red herring. If the credit card companies are willing to take the risk, they will (and are).
Federal law does not require that a company stay in business once it has entered the banking market. If the risks are too high for them to make a profit, they will fold. If they are smart enough to see the writing on the wall, they will pack up and move elsewhere in the market. Ern