Microsoft Point-to-Point Encryption

Microsoft Point-to-Point Encryption (MPPE) is a protocol for encrypting data across Point-to-Point Protocol (PPP) and virtual private network (VPN) links. It uses the RSA RC4 encryption algorithm. MPPE supports 40-bit, 56-bit and 128-bit session keys, which are changed frequently to improve security. The exact frequency that the keys are changed is negotiated, but may be as frequent as every packet.

MPPE alone does not compress or expand data, but the protocol is often used in conjunction with Microsoft Point-to-Point Compression which compresses data across PPP or VPN links.
Negotiation of MPPE happens within the Compression Control Protocol (CCP), a subprotocol of PPP. This can lead to incorrect belief that it is a compression protocol.