VPN vs. proxy: which should your business choose?

VPN vs Proxy cover

Are you worried about employees leaking private information as they browse the web? If so, you’re probably considering setting up a Virtual Private Network (VPN) or proxy server.

Proxies and VPNs both improve online privacy but in unique ways. Proxies act as intermediaries between users and the internet, while VPNs secure networks by encrypting traffic and engaging the user’s device, making VPNs more robust in safeguarding network and user privacy.

Let’s explore the VPN vs proxy contest in more detail and help you find the ideal privacy solution.

Key takeaways

  • VPNs provide encryption, while proxies don’t. This makes VPNs a better choice for business users concerned about data security.

  • VPNs work at the operating system level, covering all network traffic, whereas proxies are typically used with specific apps, potentially leaving security gaps.

  • Proxies may be faster than VPNs, but the best VPNs match proxy speeds.

  • VPNs are usually paid services and offer higher-quality encryption, reliability, and customer support compared to free proxies.

  • VPNs are more reliable than proxies, which can have frequent connection drops.

  • VPNs should be used for security and privacy, especially for remote work, sensitive financial data, and site-to-site connections.

  • Proxies can be useful for blocking access to undesirable websites and researching content worldwide, but they provide minimal data security.

  • In most cases, businesses should choose VPNs over proxies for better security and privacy.

What is a Virtual Private Network (VPN)?

VPNs are networks that route traffic through private servers before sending it to its destination. When users log onto their VPN client, the service uses special protocols to create a “tunnel” connecting data sources and destinations.

VPNs offer a couple of important security and privacy services:

  • Anonymization. Traffic routed through Virtual Private Network servers is assigned a new IP address. This anonymizes the data source, making it hard for outsiders to track online activity. Outside observers may know you’re using a VPN connection, but your original IP address will be inaccessible.

  • Encryption. VPNs encrypt data from the user device to the virtual private gateway. Any web traffic passing through a remote access VPN server is basically unreadable to outside observers while it is encrypted. Users can still browse the web or access streaming content. But their information and activity will remain private. This is very useful when dealing with financial data.

VPNs are usually paid services. A third-party VPN provider will maintain servers around the world and manage encryption. Users log on via clients, which can be integrated into web browsers if desired.

VPNs also work at the operating system level. This means they cover all traffic leaving or entering a network. They are not restricted to single apps.

Learn more about a VPN in our Learning Center.

What is a proxy server?

Proxies also use external servers. These proxy servers route traffic from user devices and give each data packet a new IP address. As far as outsiders are concerned, user traffic comes from the proxy’s remote server. This is a major benefit when accessing geo-restricted web content.

On the downside, proxies do not feature data encryption. They can anonymize the identity of a user but not the data they send. Sensitive data remains exposed to attackers, making proxies unsuitable for a business internet connection.

Proxies also tend to be associated with individual applications. They process traffic from web browsers or streaming games. But proxies do not provide all-around privacy at an operating system level.

Understanding the main proxy types

There are various different types of proxy servers, and each has its own use cases:

  • HTTP proxies. Designed to work with web pages and browsers. You can configure Chrome or Edge to route all HTTP traffic through a proxy, or just assign proxy routing to specific websites.

  • SOCKS5 proxies. SOCKS proxies work on the application level and route traffic from specific apps. For example, a SOCKS5 proxy could be assigned to route Skype conversations securely. SOCKS5 proxies are flexible but tend to be slower than HTTP versions.

  • Transparent proxies. Generally invisible to network users. A transparent proxy can filter web traffic and monitor activity. This makes them useful in settings like schools and libraries. Parents could also use them to filter the content available to children.

  • Private proxies. Private proxies provide a dedicated IP address for each user. This does not provide as much privacy as VPNs. However, it can help unblock geo-restricted websites and improve proxy speeds.

Key differences between proxy and VPN

We now know the main features of proxies and VPNs. But here’s the all-important question. How do VPNs and proxies differ, and which one should you choose?

1. VPNs provide encryption

Encryption is the most important difference between VPNs and proxies and probably the key consideration for business users. When you use a VPN, all of your internet traffic is encrypted.

The best paid providers use AES-256 encryption that has no known weaknesses. Encrypted data will be off-limits to thieves, limiting the risk of leaking commercial data. A remote work VPN will also lock down connections between home workers and central offices. So you can establish a secure connection between workloads and user devices.

Proxies never encrypt traffic. All they do is re-route packets and provide IP address anonymization. That can be useful when accessing blocked web pages. But data security will be relatively weak.

2. VPNs handle all traffic, proxies work with individual apps

VPNs function at the operating system layer. They apply encryption and anonymization to all data passing across network boundaries. Businesses do not have to install software on individual apps or configure settings for each service. Privacy controls apply over-the-top – a more convenient solution.

Because they work on the application level, proxies are used with specific software or services. They won’t cover all network connections, potentially leaving security gaps.

3. Proxies may be faster

Proxies don’t need to encrypt data as they route it worldwide. VPNs do. This imposes extra bandwidth overheads. VPNs may be slower, as a result, sometimes making them unworkable for streaming tasks.

However, the best VPNs match proxies in terms of speed. Free proxies generally use cheaper, less extensive infrastructure. So while they use more basic technology, they may be slower than VPN alternatives.

4. You’ll usually pay for VPNs

Proxies have low maintenance costs for providers and are usually free for users. At least, they are free at the point of use. As with most free services, proxy customers are the product. Expect your data to be stored and sold to third parties for marketing purposes.

There are free VPNs as well. However, paid services are recommended for business customers. Paid VPNs charge small fees and provide higher-quality encryption, speed, reliability, and anonymization. They also have stricter anti-logging policies. Your data should remain private and won’t be resold.

Unlike most proxies, good VPNs combine these services with customer support. All-in-all, they deliver much better online privacy for high-end users.

5. VPNs are more reliable

As a general rule, VPNs are more reliable. Your connection will drop less frequently. Speeds will be more regular. A host server around the world should be available at all times.

Proxies can be very reliable but do not have such a strong reputation. Expect connections to drop every now and then, especially when using free proxy services.

VPNs also offer more reliable DNS leak protection. Poor-quality proxies will likely leak DNS information to your internet service provider or the websites you visit. This completely compromises the privacy service.

Similarities between proxies and VPNs

As you can see, there are plenty of divergences between VPNs and proxies. But it’s important to remember the similarities as well.

  • Both proxies and VPNs allow anonymous web browsing. Customers use them to change their IP address. This enables access to previously blocked online services.

  • VPNs and proxies use third-party routers. While you can set up an in-house VPN server or proxy, both services are generally sourced from external partners.

  • Both can be used to control network access. Proxies are often used to block access for employees to certain websites. VPNs can also blacklist websites.

  • Neither represents a complete privacy solution. VPNs are more effective when anonymizing network traffic but are not completely watertight. Both proxies and VPNs can have technical flaws that expose your location. They may collect data to share with commercial partners or governments.

When should you use VPN and when proxy?

  • A basic rule is that VPNs should be used wherever users need security and privacy. VPNs combine reliable IP anonymization with encryption. This means company data will be protected twice as it passes over the internet. Proxies provide very little protection at all.

  • VPN connections can be used to enable secure remote work. Employees can install VPN clients on work devices at home and use an encrypted tunnel to join the central company network. Without VPN protection, any data sent from workers to the network will be exposed to attackers. With the Always On VPN feature, businesses can ensure that their network connection is always secure. It automatically disconnects the user if the secure connection is lost, adding an additional layer of protection against cyber threats.

  • Site-to-site VPNs can connect different work locations securely. They extend the main network to other sites, allowing every department or branch to access data safely.

  • VPNs are also used to transfer sensitive financial data. Companies can use them to make transactions or discuss commercial arrangements. Without encryption, using proxies for these tasks is extremely risky.

  • Proxies can play a role in some situations. Transparent proxies are often used to prevent access to undesirable websites. Companies could use HTTP proxies to wall off social media during working hours.

  • A proxy server may also be handy for researching content worldwide, assuming security concerns are secondary. You can use a proxy server to pose as a buyer from different countries and see how prices vary. Or you might access videos and bypass content restrictions.

VPN vs proxy: which is better for your business?

By now, you probably have an idea of which privacy solution to choose. Most businesses should opt for virtual private networks over proxies. A proxy server offers minimal security features. The service may be free of charge and fast, but data sent via a proxy server is always vulnerable.

By contrast, VPNs encrypt data – usually at levels that protect information from attackers. The best VPNs use military-grade encryption. Some offer add-ons like Double VPN protection that makes it hard to tell whether users are even employing a VPN.

VPNs come in business-friendly forms. You can set them up for remote workers, link departments, and integrate VPNs with cloud computing. If you choose a reliable provider, you can talk to support staff and optimize security and privacy. This just isn’t available with any proxies.

A proxy, utilized by multiple users simultaneously, can lead to reduced connection speeds, with free proxies tending to be even slower. Distance from VPN servers can also affect connection speeds adversely. Yet, choosing a VPN provider equipped with advanced technology and proper maintenance protocols ensures that any potential delays in connection speeds are minimized and virtually imperceptible.

How can NordLayer help?

NordLayer can help you implement a secure, fast, and business-friendly VPN solution. Our software-based products include VPN services powered by the NordLynx protocol. This combines speed and cutting-edge encryption.

NordLynx stands out with its streamlined, resource-efficient design, delivering robust security without compromising speed or device performance. Ideal for enhancing business communications and productivity, NordLynx is the key to a superior, unyielding, and swift internet experience.

To enhance your connections, create site-to-site setups to cover every workstation. Cater for remote workers, and implement Single Sign On that extends protection to all network assets. To find out more, get in touch with the NordLayer team today.


Is a proxy server the same as a VPN?

No. Proxy and VPN servers both route internet traffic and assign anonymous IP addresses. VPNs add encryption to data transfers. They act at OSI layers 3 or 4, while proxies operate at layers 5 to 7.

Do you need a proxy server if you have a VPN?

Probably not. VPNs deliver the same services as proxy servers, with better security, performance, and support. In some cases, you could use a VPN to work around a transparent proxy if you use one to regulate internet activity. But this is relatively rare.

Are proxy servers safe?

Maybe, but how can you be sure? Free proxy services are notorious for leaking and selling data. Users should assume that someone is tracking their activity. A proxy server should never be used to send sensitive data.

Which is faster, VPN or proxy?

Proxies are often faster than VPNs as they do not require encryption. However, speeds also depend on the number of proxy server users, available servers, and the quality of those servers. In many cases, a well-managed VPN will be faster than a cheap, poorly run proxy.

Is Tor a VPN or a proxy server?

Neither. Tor is a network of nodes located around the world. These nodes are free to access. They act as a relay, bouncing traffic between nodes until it reaches its destination. It has some VPN features, such as encryption. However, Tor traffic can often be seen by volunteers, and its exit nodes are often blacklisted. Tor speeds also tend to be slower than proxies and VPNs.

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