Differences between Digital and E-signature: Which Solution Should You Choose for Your Business?

Electronic signature on your mobile device
Electronic signature on your mobile device

  It is so easy to interchange the terms digital and electronic signature. At first glance, you might think both mean the same thing. However, these terms usually refer to two distinct methods of signing. Without proper knowledge, you might end up choosing the wrong method for your business. In turn, this can have repercussions on the legality and authenticity of your documents or transactions.

  With the rise of remote work and contactless transactions, digital and electronic signature are slowly becoming more widespread. In fact, Fortune Business Insights predicted that the demand for digital and e-signature solutions will reach $7.99 billion by 2027. With that, this article will discuss the difference between electronic signature and digital signature to help you choose the best solution for your business.


1. Purpose

  The main difference between electronic signature and digital signature is purpose. Based on the US Federal ESIGN Act, electronic signatures are “electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.” The keyword here is “intent”. People who want to enter the contract show their commitment by signing a document. This, in turn, will become legally binding for both parties.

  Meanwhile, you use digital signatures to secure a document to prevent anyone else from tampering its content. In a way, you can liken it to a digital fingerprint that you embed in a document. This makes it easier to verify and authenticate the person behind the digital signature.


2. Security

  This brings us to the next point of distinction which is security. Digital signatures often have more security features compared to electronic ones. For one, a digital signature links your identity to your signature. This is called a “Personal Key Infrastructure” (PKI). Through it, you easily identify both the party requesting the signature and the one providing it.

  Nonetheless, this does not mean that all e-signatures are not secured. E-signatures have their ways of making sure that the signatures are authentic. Take SelfieSign as an example. It records the signing process of each signature in each document for traceability and non-repudiation. This video can later on be used for review, resulting in a more secured and protected process for both parties.


3. Types of signatures

  It is only natural to think of signatures as a unique scribble of your name or initials. Some might also be wondering, is a scanned signature an electronic signature? In the case of electronic signatures, it can be in any forms. This includes scanned images, verbal acknowledgement, ticked boxes, or a simple click of the mouse. Through this, you can eliminate a lot of legwork and reduce turnover time for both customers and businesses.

  Meanwhile, digital signatures are computer-generated. It uses encryption and decryption technology behind your signatures which are supported mainly by specific platforms and solutions. Two great examples would be Adobe Signature and Microsoft Word.


4. Authentication

  As mentioned earlier, digital and electronic signatures have different security features. It also follows that the two have their own ways to authenticate and verify a signature’s integrity. For one, there are certification authorities that authorize and regulate digital signatures. Whereas electronic signatures don’t. These are trusted third-party organizations with the duty to verify and authenticate digital signatures, making it more difficult to tamper with. It then issues a digital certificate which can be used to track the original author of the document.

  Electronic signatures, on the other hand, don’t have that type of regulation. As a result, there are several states and countries that question its authenticity and legal use. Moreover, it may be difficult to verify the real owner of the signature since it is not certified or authorized formally. Nonetheless, there are solutions that offer more security when it comes to e-signature. You can check out these examples of e-signature software from FinancesOnline.


5. Legal use

  With the question of security and authenticity, many countries remain hesitant on the use of electronic signatures compared to digital ones. Some states in the US only accept digital signatures as legally binding since it complies with international standards for security. Meanwhile, electronic signatures are often less favorable in the eyes of the law.

  Hence, you should be careful with what type of signature to use for your business. To do that, you must first determine the level of authenticity that your documents would need in the long run. You should also check with your area’s laws, policies, and regulations regarding electronic and digital signature to avoid misunderstandings in the future.


Knowing the difference

  Signatures are evolving. Organizations are moving away from wet and handwritten ones. Nowadays, they prefer using online signatures. An example of digital signature and electronic signature would be a tablet or mobile app to capture an image of a handwritten signature. It can also be simply a typewritten name into a signature box.

  And while the two might seem the same, they have very different features that you need to take note of. You must familiarize yourself with these differences to make sure you choose the right method for your business. So make sure to check out what type of signature your software supports before using it for your transactions and documents.