4 eSignature Questions You Need to Know the Answers To

Keith Krach
June 12, 2016

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 fingerprint.

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 digital signature?

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.

Additionally, different 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 

Additionally, digital 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. 

Keith Krach

Keith Krach is Chairman of DocuSign, The Global Standard for Digital Transaction Management.