Electronic Signature vs. Digital Signature: Are They the Same Thing?

June 10, 2022
By Lisa Cornwell

For years, signatures have played a crucial role in our identity as a species. Thanks to the English parliament's 1677 passing of the State of Frauds Act, signatures have become an important part of daily life. However, the printing, physical signing, and scanning of documents is quickly becoming obsolete, as the practice is going digital. With electronic and digital signatures, there's no need for pen and paper.

When documents are signed online, are those signatures digital or electronic? While most people use these terms interchangeably, there are differences to consider. Here, we will examine the nuances of digital and electronic signatures, so users will have the information needed to go paperless.

Digital and Electronic Signatures: Making Manual Signing a Thing of the Past

Manual or wet signatures are any that are signed by conventional means, including stamping, embossing, or writing. Any signature made by hand is considered a wet signature, even if it's signed with a pencil. When most people think of signatures, they envision those written by hand and in cursive.

In the not-so-distant past, the wet signature was the gold standard in the document approval field. A person's signature is like a fingerprint; they are all different. They're hard to forge reliably, so they long served to confirm a document signer's identity.

Unfortunately, manual signatures are not foolproof. As anyone who's ever tried to fake a signature knows, it's possible to come up with a passable forgery. Additionally, storing paper records is impractical and labor-intensive. With digital and electronic signature processes, these worries are eliminated.

What Are Electronic Signatures?

An electronic signature is one captured on a computer or mobile device when the user draws or types their signature on the screen. Also known as e-signatures, electronic signatures are commonly assigned to online documents, contracts, and agreements. By using the capabilities and features of today's e-signature technologies, business owners can simplify the contract management process.

Choosing an electronic signature over a physical, traditional signature makes signing easier for both sides. Today's online signature solutions provide everything business owners need to shorten turnaround times and streamline the contract management process.  By offering effective, fast signing, companies can gain an advantage over their competitors, offering more value to clients.

What are Digital Signatures and How Do They Differ From Electronic Signatures?

A widely held misconception is that electronic signatures and digital signatures are the same. While an electronic signature is an online representation of a user's physical signature, a digital signature is an algorithm that ensures a signature's integrity and authenticity. Here, a virtual identifier is created, and the signer authenticates it by signing a contract, legal agreement, or document.

The 'fingerprint' of a digital signature doesn't just protect documents; it also safeguards users' identities. In the simplest terms, the most important difference between electronic and digital signatures is in the ways signers are identified and authenticated.

Digital signatures use PKI or public key infrastructure to identify the providers and recipients of signatures. PKI produces private and public keys for identification purposes. Document holders and signers must have certificates from known digital authorities so signers and signatures can be linked.

Electronic and digital processes can be used to collect signatures and identify those providing them. However, with digital signatures, additional steps are required.

Why Should Users Choose Electronic Signature Over Digital Signature Processes?

Digital and electronic signatures are both secure, and that's why most of today's businesses use them. E-signatures are more secure than those done on paper because they're tracked by emails, signed certificates, contract copies, and other digital auditing methods.

The ESIGN (Electronic Signatures in Global and National Commerce) Act, the UETA (Uniform Electronic Transactions Act), and eIDAS (electronic Identification Authentication and Trust Services) regulations have put certain protections in place for document senders and signers, and these rules have led more people to put their trust in digital signatures.

Why Businesses Need Digital Signatures

A comprehensive digital and electronic signature solution can help companies stay compliant while protecting sensitive information. Organizations in multiple industries can benefit from the replacement of manual signing processes with e-signatures, including lower costs, streamlined workflows, and shortened contract lifecycles.

Are Digital and Electronic Signatures Legally Binding?

Thanks to the Electronic Communication Act of 2000, electronic signatures are legally binding in the United States. The above-referenced eIDAS regulation has made similar changes in Europe. Despite the legalization of electronic signatures, some uncertainties remained. However, the Law Commission confirmed the legality and validity of e-signatures in the execution of documents where a signature is required.

Are E-Signatures Allowed in Court?

Electronic and digital signatures are admissible in America's courts. The signature indicates the user's intent to agree to and accept the document's contents, providing more evidence that just isn't found with handwritten signatures. With a written or 'wet' signature, validity is determined by comparing copies of that signature with testimony from witnesses or handwriting experts. Because electronic signatures have such a long audit trail, which includes timestamps, location data, and an IP address, it's easier to determine their authenticity.

Which Technology Should Businesses Use?

While electronic signatures have numerous benefits, many organizations are reluctant to make the switch. Whether the reticence stems from increased implementation time, complicated onboarding, cost, or a steep learning curve, convincing stakeholders of the value of the technology is essential. To stay competitive, companies must find ways to simplify workflows, and electronic signatures will do just that.

Though both digital and electronic signatures are legally binding, most companies prefer the convenience and ease of e-signatures. However, because they're not regulated in the same ways, it's each business owner's responsibility to develop unique codes and applications to conform to recordkeeping rules and authentication requirements.

Know the Difference

While digital signatures and electronic signatures share many similarities, there are a few characteristics that set the two apart. While some businesses with special circumstances need digital signatures, a majority of businesses are using electronic signatures because they simplify workflow. Please reach out any time if you would like more details to understand the difference between electronic signatures and digital signatures. We can help assess your unique situation so you can decide which option is right for your business.

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