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Although they might sound similar, the terms “digital signature” and “electronic signature” actually differ in many ways. Understanding this difference is essential for anyone who runs a business and needs to collect these signatures.
That’s why we’ve decided to break down these differences and let you know what the right type of signature for your business is. In the following article on the digital signature vs. electronic signature, we’ll explain how these types of signatures work, where you can get them, and what their main purposes are.
We can define an electronic signature as a signature applied electronically instead of being written on a physical piece of paper. It can look like a symbol, a stamp, a scan of your handwritten signature, and even a voice message. Either way, it signifies approval of all content of a particular form or document.
All that is needed for an electronic signature is a mark or a symbol that shows one’s intent to sign that document. The signer is usually required to tick a check box or write their signature using a mouse, touchpad, or some other device.
The use of electronic signatures is regulated by a legal document called the Electronic Identification, Authentication and Trust Services or eIDAS. According to eIDAS, there are three different types of electronic signatures:
- Basic electronic signature
- Advanced electronic signature
- Qualified electronic signature
Basic Electronic Signature
A basic electronic signature is any signature made in an electronic form where the signer has shown an intent to become bound by the content of the signed document.
Advanced Electronic Signature
Unlike the basic one, an advanced electronic signature has some additional requirements it needs to meet. It has to be:
- capable of identifying the signer
- uniquely linked to the signer
- linked to the data signed with it
- created using electronic signature creation data fully controlled by the signer
Qualified Electronic Signature
A qualified electronic signature is an advanced electronic signature created by a qualified electronic signature creation device and based on the qualified certificate for electronic signatures. Qualified electronic signatures invoke an extra layer of trust, and their main benefit is the fact they’re recognized by all member states of the EU.
Benefits of Electronic Signatures
There are multiple ecological and security advantages of using electronic signatures. Specifically, electronic signatures are:
- Cost-effective and fast. It takes about as much time to sign a document electronically as to sign it on paper. However, you’ll save a lot of time and money handling the document that needs to be signed or has been signed, as you won’t have to scan, print, or mail it. All common types of electronic signatures require just a few moments to be completed. It takes only a few seconds to send an electronic document to the signer, and as much time for them to send it back to you, signed and ready for further use.
- Reliable. Most tools designed for creating electronic signatures guarantee the integrity of the signed data. With an electronic signature, clients know exactly who signed the document and can rest assured that no one modified the information after it had been signed. What’s also important is that the signer can’t deny having signed the document afterward or claim that changes have been made to it subsequently.
- Flexible. One of the biggest advantages of electronic signatures is that they can be applied anytime, anywhere. As the need for working remotely continues, it’s vital we find a way to sign important documents electronically, from the convenience and – more importantly – the safety of our homes, instead of doing it in person. It’s also useful if a document needs to be signed by several people. All parties can sign the document wherever they are, whenever it suits them.
- Good for the environment. One of the key features of an electronic signature is that it reduces paper consumption, which is great for the environment.
- Secure. Enhanced security is yet another advantage of electronic signatures. Papers can easily be misplaced or tampered with. On the other hand, it’s much easier to detect any alterations to an e-document. They are easier to record and store and can be encrypted for complete security.
To see what separates digital signatures from electronic signatures, we also need to cover what digital signatures are and how they work. A digital signature, also known as “sealing a document,” is a form of electronic signature with additional security layers. That means all digital signatures are electronic signatures, but not all electronic signatures are digital signatures.
Think of a digital signature as a digital fingerprint in the form of a coded message that connects the signer with the document they signed in a recorded transaction and confirms their identity by using digital certificates. All digital signatures rely on public key infrastructure – systems that identify signees with digital certificates – to ensure advanced levels of security.
Digital signatures and handwritten signatures have one thing in common: They are unique to the signer. The PKI protocol digital signature solution providers use requires generating two keys – a public and a private one – using mathematical algorithms. These two keys play the leading role in establishing a secure environment for the signing process.
The private key is securely kept by the signee, and once they electronically sign a document, the algorithm creates a string of characters called a hash that matches that particular document and uses encryption to secure it. That encrypted hash represents a digital signature. As the signature has a timestamp, the document becomes invalid if any change to it occurs after the signing.
Benefits of Digital Signatures
There are multiple features that differentiate digital signatures from other forms of e-signatures. Their main advantages are enhanced security and their broad legal acceptance. Let’s see what that’s all about.
- Legal validity. Digital signatures are broadly accepted and recognized by the majority of the world’s governments. More and more countries are starting to accept digital signatures on legally binding documents. In the US, there are two federal acts that recognize their legality: the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA).
- Added security. The main thing that differentiates a digital vs. an electronic signature is the enhanced security it provides. The unique fingerprint in a digital signature stays embedded within the signed document, making it easier to spot any changes and alterations that might happen after the signing.
- Cutting costs. In addition to the previously mentioned benefits, companies prefer digital signatures for their cost-efficiency. Using digital signatures can save all the funds they would otherwise spend on ink, paper, printing, scanning, mailing, etc. There are also some indirect costs they can do away with, such as filing and archiving documents.
- Better time management. With digital signatures, you no longer have to wait for other participants to become available or return from a conference or a business trip. You can simply email them the necessary documentation, and it can be signed and sent back to you within minutes.
Differences Between Electronic and Digital Signatures
Now that we know the definition of both terms and their main components, let’s highlight their differences.
- An electronic signature is mostly used to verify a document, while a digital signature serves to secure it.
- Unlike an electronic signature, a digital signature can be verified.
- An electronic signature only shows an intent to sign a particular document, while a digital signature secures it.
- A digital signature implements advanced security features.
- A digital signature is regulated and accepted by the certification authority, a trusted third party that validates the signer’s identity.
Although many organizations still rely on paper documents, the trends are shifting, and the need to digitize your paperwork is now stronger than ever. Converting documents into digital formats and signing them electronically or digitally can significantly improve your operational efficiency, boost the workflow, and save you a lot of time and money.
There are important differences between an electronic signature vs. a digital signature, so you should think about which of these two options suits your business needs. If you need a method of approving documents for internal use, an electronic signature is probably a good enough choice.
However, if you need to prove the authenticity of a signature, or need an audit trail, you should go for a digital signature instead. A digital signature can be used in court. And while both electronic and digital signatures are legally binding, digital signatures offer tighter security.