Peering is a bond between two or more ISP’s whereby each of the ISP provider forward the data packets directly across the link and that too without using the standard Internet backbone. In simpler terms, it is a process where two or more Internet networks get associated for the exchange of traffic. Peering allows sharing traffic without paying to a third-party to forward their traffic over the Internet for them. There are several types of peering connections, which accord different networks to get connected.
The peering process is carried by interconnection of physical networks, an exchange of routing info through the BGP routing protocol, or through a contractual documentation. Internet is group of several networks that follows a common framework of BGP routing, and globally unique IP addressing. The relationship between the network operators is established in three types, i.e.; either by paying the network operators for traffic exchange, which is called Transit, by peering, wherein two or more network operators exchange traffics, free of charge, or by paying a network money to get Internet access.
There are number of benefits attached to peering, such as enhanced performance, increased hold on routing over the traffic, and greater capacity to accommodate heavy traffic flow.