Ideally, any institution would want its own private network for communication to ensure security. However, it may be very costly to establish and maintain such private network over geographically dispersed area. It would require to manage complex infrastructure of communication links, routers, DNS, etc.

IPsec provides an easy mechanism for implementing Virtual Private Network (VPN) for such institutions. VPN technology allows institution’s inter-office traffic to be sent over public Internet by encrypting traffic before entering the public Internet and logically separating it from other traffic. The simplified working of VPN is shown in the following diagram −

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