Very basic question. I'm setting up a payment gateway, but ... a lot of payment gateways say that they are merchant account alternatives. http://www.ccnow.com/, for example, says that it's a merchant account alternative. What are differences between merchant accounts and merchant account alternatives?
I would assume that since you mentioned CCNow, the Merchant Account Alternatives would be in effect 3rd party payment processors. For one thing, it is not that easy to get a merchant account because you need to apply for one from your bank then get an internet gateway to work with it. Once done, you will need to process each payment request on your end. For all that, you probably need to have a registered business, With a 3rd party payment processor, it would not need to get your own merchant account and sign up is usually very straightforward and probably instantly approved. This makes it easier and a better alternative if you are not taking in a lot of sales or just starting out or even wanting to bother about the complexity of online transactions. With that said, a 3rd party payment processor is usually more expensive per transaction and you do not get the money in your bank immediately. A merchant account is usually cheaper per transaction but may carry monthly fees for the equipments and the gateway.
Eddy covered it all pretty well, the only other thing I'd add is if you use a merchant account is that you have to stay compliant with the PCI Data Security Standard Which can be a pain for a new or small business. If you're just starting out I recommend going with a third party processor.