PPP is a Layer 2 protocol encasulation type that supports both synchronous and asynchronous circuits and provides built-in security mechanaims. The encapsulation ppp interface configuration mode command is used to configure encapsulation for a PPP (Point to Point Protocol) serial link on a Cisco router. PPP encapsulation provides for router-to-router and host-to-network connections over both synchronous and asynchronous circuits. Serial links are configured to use Cisco High Level Data Link Control (HDLC) encapsulation, by default, on Cisco routers. The Cisco version of HDLC is incompatible with the industry standard version used on other router brands because it contains a type field that identifies the underlying network protocol being encapsulated by HDLC. This is a beneficial feature of Cisco HDLC but makes it incompatible with other router brands.

For this reason, a Cisco router that is going to be connected to a non-Cisco router should be configured to use PPP instead of the default. The encapsulation ppp interface configuration mode command will do this. If you set one of the routers for PPP and leave the other router at the default encapsulation for a serial connection, the connection will fail due to incompatible encapsulation.