Hi guys I wanted to know if using redirects to send a visitor directly to the merchants site,without actually creating a landing page, will affect my quality score and increase my CPC bid ?
Sometimes direct linking is the best way to go it you just want to test out a campaign. Google frowns redirect pages, and may even turn your campaign off. Forthermore, there's nothing to gain from using this method besides a little less competition on Google (read their domain policy). There's no real alternative to making loads of money BUT dedicated landing page. They give you the control you need to lower your CPC and up your quality score.
If you do that, you have to have the display URL the same as the merchant's URL, which is not always allowed. These days a lot of merchants are cracking down on this. But the quality score and bid will depend on the quality of their site vs the quality of your landing page. Could go either way.