Switching costs vary by size of retailer. They are high for smaller retailers which is the market ADS focuses on. Still their two largest customers make up 30% of the card segment revenue. These customers probably have a lot more leverage and likely less profitable.
If it is purely private label card, then switching costs are not all that much. Citi (with exception of Costco) and Capital One can onboard a new retailer pretty efficiently. Where ADS has increased switching costs is by integrating marketing with cards. Epsilon and LoyaltyOne makes it a pain for smaller retailers to move their private label cards.
I don't think this is true. Look at SYF. Lowe's has been with them for ~40 years. Most of their large retailer relationships are 10-20 years, and their ROE's are very high. It's not a simple switch for the retailer.
Today's announcement does not necessarily imply SYF lost the WMT contract and it is WMT's obvious right ask for bids. But if SYF lost WMT as customer, this would be significant given the low penetration of PLCs at latter. SYF mgt have stretched how much they have invested in mobile capabilities in recent months. On top of that, I hope mgt do not bid for WMT at any ROA.