If you haven't read the PayPal story, you probably should. A good version of it is to be found in Founders at Work, as told by Max Levchin (the nerd who mostly solved fraud for PayPal). Turns out the early story of PayPal is the story of solving the fraud problem...so it is extremely relevant to this discussion. PayPal also started as a company doing security and payments on portable devices, so it's doubly relevant.

As far fraudulent devices, I think it's pretty safe to assume that people aren't going to be swiping their cards with random people; rather merchants and vendors that they already have a reasonable level of trust with, but in situations where sales would have been limited to cash only or more complicated and PO-based (trade shows, live events, sales guys in the field, etc.). It won't stop the kinds of fraud that already happens; like your waiter at a restaurant keeping lists of card numbers for sale on the black market. And, I guess it would make that kind of fraud easier, since the attacker would have more information.

But, people are, I think, pretty cagey with handing random people their credit card outside of the context of a reasonably trustworthy business. I doubt this will change that. I'm about the hit the road doing sales work for my company, and I can see this coming in very handy, and I don't think my potential customers would have any reason to be concerned about fraud (since they can easily check up on us, and know that I am who I say I am).