As digital services become
more important to customers around the world, they also become more important
to businesses. Companies are now able to plan and execute transactions more
quickly than ever before, and last year business-to-business ecommerce grew at twice the rate of business-to-consumer e-tailers.
New opportunities arise
for companies every day, and DocuSign’s electronic signature products were made
to help you conduct business transactions more easily and with more speed than
ever before. But how do you know when to use a standard eSignature, and when to
use a digital signature? How can you tell the difference? And which companies
can benefit from this software? All of your questions are answered below.
What is an eSignature?
An eSignature is a broad
term that refers to any format of adding an electronic signature or other mark
of approval or identification to a document or transaction. The legal ability
to use electronic signatures to sign contracts and other official forms over
the Internet was first established when the United States government passed the
ESIGN Act in the year 2000.
Under the ESIGN Act, and
later the Uniform Electronic Transactions Act (UETA), an electronic signature
is legally valid in the United States as long as it meets a specific set of
criteria. All parties must purposely intend to sign the document, and all must
confirm that conducting business electronically is an acceptable transactional
method. Additionally, the software used to facilitate the signature must
maintain records that show the details of how and when the transaction was
completed, and when the signature was created. These records must be
identically reproducible for all parties involved in the business transaction.
Electronic signatures can
take many forms. The most basic ways that people electronically sign documents
on the Internet include clicking on “I Agree” checkboxes, typing out initials,
or using a scanned digital image of an ink signature on paper.
What is a digital signature?
A digital signature is an
advanced type of electronic signature that provides a much higher level of
security and identification. While an eSignature represents a variety of
standard marks that people may use to represent their written consent, a
digital signature is a mark that can be uniquely identified to an individual
user. In that sense, you can think of a digital signature as an electronic
A digital signature can
only be obtained through certified providers. Digital signature providers, like
DocuSign, abide by a set of technical encryption protocols called Public Key
Infrastructure, or PKI. These protocols require a digital signature provider to
generate two key codes for a signer: one public and one private. The codes are
linked, but the public code cannot reveal the private code, which is always
securely held by the signer.
Any party that needs to
authenticate a digital signature is given the signer’s public key. When a
document has been digitally signed by the intended signer, an algorithm within
the public key will decrypt the cipher of the private key to which it is tied,
revealing the signature.
However, if a document has
been fraudulently signed, or altered after the digital signature was made, the
public key will not be able to decrypt the data, indicating that the signature
is invalid. This provides all parties to a contract or transaction with the
best available defense against deception when conducting business over the Internet.
When do I need to use an eSignature versus a
Simple forms of
eSignatures are legally binding in many cases and across many countries, but a
digital signature should be used when enhanced security is needed. The higher
the value of the transaction taking place, the more important it is to use a
digital signature. Examples of high-value transactions include documents of
sale, contracts where monetary rates are established, or any other document that
could be used as legal evidence in the event that the signer reneges on a valuable
contract or agreement.
regions of the world may require electronic signatures to meet different
standards, and the heightened security offered by digital signatures meets the
requirements in jurisdictions such as the European Union. DocuSign’s digital
signatures are also able to meet the more rigorous legal qualifications
mandated in highly regulated US industries, including government, healthcare,
and civil engineering and construction.
How can a company benefit from digital signatures?
Any company that wants to
remain competitive in the age of digital disruption needs a digital signature solution.
A company’s viability in the market is directly correlated to the speed with
which it can do business, and digital signatures allow documents like
contracts, purchase orders, and other agreements to be completed in minutes,
inside or outside of the office
signatures can protect you and your company from fraud by forgery, and save you
the time and money required to detect such problems and respond. The use of
digital signatures can also improve the way that your company is perceived by other
businesses and your customers. Using modern technologies like digital
signatures communicates that you are evolving with the market, and can handle
whatever changes the digital future of business brings.