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However, since VPC peering has no cost, and traffic between two VPCs using the Transit Gateway does have a cost, VPC peering has a place in Cornell AWS networking in certain situations.

When to Setup VPC Peering

• High-volume data transfer
• Ultra-low latency data transfer – Traffic using peering connections makes exactly one hop. Traffic using a Transit Gateway makes about four hops.
• When Security Groups in one VPC need to reference Security Groups in the peered VPC. – → As of November 2024, our Transit Gateway connectivity does not support cross-VPC Security Group references.
• When one of the VPCs is not connected to the Transit Gateway (and thus not using Direct Connect).
• When both VPCs reside in AWS account(s) that you own, and your team has expertise the to setup peering.

When to Avoid VPC Peering

• Transient data transfer
• Development or experimental workloads
• Low- and medium-volume data transfer