When two ISPs at the same level of the hierarchy often peer with each other, then any time they send a traffic to each other they have to do it through a provider ISP, to which they they have to pay for carrying the traffic. The two ISPs may reduce their payments to their provider ISPs when they peer to each other directly.
Internet Exchange points (IXP) is a meeting point where multiple ISPs can connect and peer together with each other. An ISP earns its money by changing each of the ISPs that connect to the Internet exchange points a small fee, which depends on the amount of traffic sent or recieved from the IXP