Yes. 2CO is payment processor like paypal. BTW its not free to open $49 to open 2CO account as far as i know DON.
2CheckOut is more like Google Checkout as it is typically a 3rd party credit card payment processor. Recently, they started accepting paypal payments so you get the best of both worlds. Typically, 2Checkout has better fraud detection process than Paypal. You can check out their website at http://www.2checkout.com .
You can't really compare 2checkout and paypal. 2checkout is more like a credit card merchant account provider. Its the same as walking into your local bank opening a business account and then wanting a credit card merchant account, 2checkout is the marchant account bit without the hassle of opening a business bank account, getting a credit card terminal etc. Its all done online through them. They have a much better fraud prevention because they are there to protect your money, after all you are paying to use the service, you are the customer. Paypal is there to protect their money not yours.
Be prepared that if you sign up with them, apart fom it costing $50, you have to put certain things in place on your site like privacy and refund policy, customer service information, a disclaimers like this Please note that 2CO.com is an authorized out-sourced vendor solution and is in no way a Third Party Processor. but they help you out once you are with them, one of their guys emailed me telling me what i had to have in place, i was not totally sure about some of what i needed to have in place, and he explained it. So far ive never had a payment yet with it (on a directory) but the option is there anyway. Also check what they allow, always do that anyway with any online payment processing service of whatever type.