Businesses often interchange the terms electronic signature and digital signature when negotiating contracts online. Contrary to popular belief, electronic signatures and digital signatures are different.
This misinterpretation means business and legal teams often need to use the right tools to sign contracts or use insecure and unintegrated tools.
Be assured. You don't have to be afraid. This deep dive will show you precisely what electronic signatures and digital signatures are. It will also explain when and how they differ.
Click the button below to sign contracts online securely. Continue reading to learn more about the differences between digital signatures and eSignatures.
Although electronic and digital signatures are often interchangeable, the concepts are different. A digital signature is used primarily to protect documents and is certified by certification authorities. An electronic signature, however, is often associated with a signed contract. Below is more information on the differences between the two concepts.
What is an Electronic Signature?
Electronic signatures, according to the US Federal ESIGN Act, are:
"Electronic sound or symbol, or process attached to or logically associated to a contract or another record, and executed or adopted to sign the record. "
E-signatures can be loosely defined as any sign applied electronically to a piece of paper. Although electronic signatures can be used for document content confirmation, some have different assurance levels. Consider a more secure option if you work in an industry with strict regulations.
An eSignature, an electronic signature that businesses can use to sign contracts electronically, is described in one of our previous posts about electronic signings.
Electronic signatures allow legal and business teams to sign contracts online rather than physically adding an impression, mark, or name to a paper contract with a pen. Electronic signatures are legally binding because they signify that a party is willing to accept specific terms.
There are many ways to create electronic signatures. The most common method to add an electronic signature to a contract is manually adding them to PDFs, Word documents, and spreadsheets. You can also use eSignly, a contract platform.
The Main Features of an Electronic Signature
According to US law, an electronic signature is any electronic symbol or process associated with a contract or record the interested party intends to sign. An electronic signature is a declaration of intent to sign a document. Another distinction between electronic and digital signatures is that electronic signatures can be oral, with simple mouse clicks, or by any other electronic authorization.
An electronic signature reveals the signer's intention to sign the document. This is the main characteristic of an electronic sign. It is usually compliant with agreements or contracts entered into by two parties. There are many types of electronic signatures, as we have already mentioned. Once all parties have indicated their intention and commitment to enter a contract, they are legally binding.
An electronic signature also helps verify the authenticity. After completing the electronic signature, it should be possible to identify all parties. An electronic document, however, can be challenging to verify as there is no digital certificate. This makes it secure.
An electronic signature can also be used to sign an agreement. Two people typically agree to fulfill certain obligations in a contract. If both parties sign the agreement, it becomes legally binding. You can also use an electronic signature in this instance. Electronic signatures are also common in contracts, as they are simple to use.
Top Electronic Signature Software for 2023
Electronic signature software is now more convenient than ever. Electronic signature software is more efficient, faster, and sustainable than paper.
Electronic signatures can be legally binding. Electronic signatures are legally binding. The best electronic software automatically tracks and generates audit trails. Many of these suggestions are free to get you started.
SignNow is a cross-platform eSign software that has a robust API. Businesses can embed electronic signature capabilities into their apps and websites.
It is so simple that you can easily create complex esign workflows and facilitate online signing requests without writing a single line code. Many e-sign platforms provide similar functionality, but none are as simple as signNow.
SignNow can also be integrated with many third-party applications. SignNow can easily sync with your CRM, accounting, payroll, ERP, or marketing automation software.
The pricing for the Business Premium plan looks almost identical to other software's lowest-tier plans in this space. Unlike the Business plan, Business Premium allows users to personalize branding, send bulk documents, remind signees and send links for signatures.
All plans include unlimited templates and the signNow app. signNow offers enterprise-grade security. SignNow is GDPR compliant and OAuth 2.0 compliant. It is also PCI DSS compliant and HIPAA compliant.
eSignly can be used by many professionals. While you are away from your office, you can complete the paperwork and sign it. You can also request documents via email and sign them on the screen. Gmail, Dropbox, and Google Drive are all options for signing documents. If you own an iPhone X or later, Face ID can be used for signing documents. It supports Apple features like Dark Mode and multi-window iPad. To import your document, tap eSignly within the app's most recent version. You can sign the document and ask for signatures after it is imported. You can open documents on your iPhone/iPad using Files, Mail, or any other app.
PandaDoc is the overall winner for best overall, as it provides a broad range of features and a user-friendly interface. It also offers reasonable pricing and a plan that can be used for different business and personal signature requirements.
PandaDoc is an excellent choice for signing documents, whether you only need one signature to sign a contract once or a lot of signatures for your business. It is easy to use and offers something for everyone. It is our favorite electronic signature software.
HelloSign, an online signature software, is available from Dropbox. Dropbox is a popular file storage and sharing site. Although it has many fancy features that larger companies can use, solopreneurs and freelancers may prefer the Essentials plan. This will provide a complete service for their business needs.
Essentials allow you to save five templates, send reminders or notifications, set signer fields, and validate signature data. You can also integrate cloud storage and submit unlimited signature requests. Additional security features include two-factor authentication, tamper-proof documents, and cloud storage.
Although technical users may be able to use the HelloSign API for electronic signature integration on their apps or websites, most freelancers won't require this integration. It offers enterprise-grade security tools and compliance tools that can be used for almost any job or profession.
Adobe Acrobat can be used to view PDF files free of charge. Adobe Acrobat Pro is available for users who have greater needs. This version includes all the features needed to add signatures to documents. Sign up for Adobe Sign to send your PDF online for payment and signature.
Acrobat Pro uses signatures to create documents. The Windows version is $12.99 per month, while the Windows/Mac version is $14.99 per month. Additional signature features by Adobe Sign Solutions are available for an additional fee. These features can be as simple as signing PDFs or creating documents. They can also include website integrations and custom branding.
What is a Digital Signature?
A digital signature (also known as "sealing" a document) is a method of proving the authenticity and integrity of a document. This is not a legal signature but a way to protect against forgery and tampering when handling different documents.
Digital signatures differ from electronic signatures, which use less advanced authentication methods to verify signer identities like email addresses and phone numbers. Still, digital signature providers rely more on advanced authentication processes like certificate-based IDs.
Digital signatures can be used to identify the document. Each digital signature is unique and cannot be duplicated or altered. This allows you to verify that the person signing the contract is the one they claim to be. This helps protect documents from being altered by creating an audit trail that allows for the traceability of all interactions with legal documents or contracts.
eSignly's native eSignature functionality provides the same level of security. It uses strict identity verification processes like creating timestamps, collecting IP addresses, and creating audit trails.
This allows eSignly users to benefit from a digital signature's security and legal validity - in one tool. Are digital signatures and electronic signings the same thing? What if you don't use eSignly?
A digital signature is encryption/decryption technology used to create an electronic signature. Digital signatures are not electronic signatures by themselves. Digital signature encryption, however, secures signed documents' data and helps verify authenticity. It cannot be used alone to capture a person's intent to sign a document or legally bind them to an agreement.
There are better solutions than digitally signing documents. This includes a user interface (UI) that is out of the box and advanced workflow customization and transaction management capabilities used for more complex transactions that touch customers.
You must ensure that your solution for managing your signing processes is built on digital signature technology. This will guarantee the integrity and authenticity of the document and the underlying signatures. Your document-based transactions could only be legally binding with digital signature free software. This can put you and your company at risk in the case of a legal or compliance matter.
The Main Features of the Digital Signature
A digital signature can be described as a unique digital characteristic, similar to a fingerprint embedded within a document. The signer must have a digital certificate to be associated with a document.
The certification authority issues the digital signature.
It can be used as a passport or driver's license. The digital certificate can be used to verify the document's authenticity and to check for any tampering. It is a critical component of identity verification.
A digital signature can also be used to protect digital documents. Fraudsters can create fake documents online by using an electronic signature. However, with a digital signature, it is almost impossible. Only authorized persons can see the electronic document to make edits or changes.
A digital signature can be applied to any document. The digital certificate is attached to the data using a unique fingerprint. Because these two components are unique, a digital signature is more practical than traditional wet signatures. It can also be authenticated as their origin. This cryptographic operation can perform these actions:
Document authenticity and source verification
Ensure that the document is unchanged after signing
Confirm the identity of the signer
Does a Digital Signature have the Same Meaning as an Electronic Signature?
Both electronic and digital signatures can add authenticity and integrity, but they do it differently. Digital signatures allow for the identification of specific documents. eSignatures indicate that a signatory intends to be legally bound to the terms in a particular document.
eSignly's electronic signature functionality, for example, allows legal and business personnel to electronically sign contracts from any device. But it is eSignly's digital signing properties that make sure contracts are legally signed and remain tamperproof.
Digital signature technology can be used with electronic signatures, making them more secure.
What is a Digital Certificate?
Digital signatures use Public Key Infrastructure (PKI) and rely on public and private keys to protect the underlying digital transactions. You need to be sure that all parties involved in a transaction, such as signing a document electronically, are using valid keys.
This is where the digital certificate's role comes in. A digital certificate is an electronic document issued to a signer from a Certificate Authority or Trust Service Provider. It binds public keys with the signer's identity. An electronic signature must be legalized—best-in-class solutions for eSignature use digital certificates in the e-sign process to authenticate signers.
The certificate verifies and certifies that an electronic signature corresponds to a particular signer. It contains data about the signer's identity (e.g., name of signer, signature keys, certificate issuer) and information related to their identity. To create a digital signature, certificates are stored on signature creation devices like tokens, secure smart cards, and centrally in a Hardware Security Modul (HSM). The signer's certificate can be cryptographically attached to the document during the signing process using their private key.
Types of Digital Certificates
Organizations may have different requirements regarding digital certificates. This can be based on factors like geography, industry, and the risk profile of each transaction. Signing can be done in many ways, depending on where the certificates are kept.
- Server-signing certificate: The signer is authenticated securely. The document is digitally signed using the trusted certificate in the cloud (or on-premises if the application is in-house).
- Local-signing certificate: The signature's identity is linked to a personal certification (locally stored on a PIN-protected smartcard, USB token, or computer) which digitally signs the document.
Forrester reports that the US prefers simpler eSignature authentication. They have also adopted the advanced eSignature (AES), which uses multiple forms of authentication and a standard server signing certificate hosted in the vendor's cloud service. Firms within the EU, on the other side, place a higher priority on authentication and may need an AES along with strong forms or the Qualified e-Signature (QES), which relies on third-party digital certificates. For example, citizens in Belgium receive an electronic identity card (eID), including a unique digital certificate. This can be used to sign contracts and agreements. Under the EU's eIDAS regulations, this creates a QES.
It is easy and quick to send documents for eSignature. After all, the eSignatures have been captured. You can search for an eSignature services that packs and secures the final document with a digital signature. The digital signature should be applied at two levels in the e-signature solution:
- To prevent signature tampering, use the signature layer
- To prevent any tampering with the document's content at the level
This double layer of security protects the integrity and authenticity of the document. All parties to a transaction can be confident in the integrity of a signed document thanks to tamper-evident security controls like these. E-signatures can only be trusted as secure as they provide. All attempts to alter any part of the document (e.g., adding or removing words or replacing pages) must be visible.
Key Differences between Electronic Signature and Digital Signature
A digital signature is different from an electronic signature in that it seals and identifies a document to prevent forgery. On the other hand, electronic signatures are used to make sure that legal terms are adhered to, provided the document has been signed with an eSignature.
While electronic and digital signatures can often be used to agree on contracts, some differences exist. These are the differences:
- A digital signature serves the primary purpose of protecting a document from being altered by anyone without authorization.
- A document can only be verified using an electronic signature. The author and source of the document are identified.
- Certification authorities approve and regulate digital signatures. These are trusted third parties who have been entrusted with this task.
- Electronic signatures cannot be regulated, which is why they are less prevalent in different states. Their authenticity is also questionable. They are easily altered.
- Digital signatures include additional security features to protect the document.
- An electronic signature is less secure because it does not contain viable security features that protect it from being altered by others without permission.
Types and uses of signatures
- Two common digital signatures are based primarily on document processing platforms: Adobe PDF and Microsoft.
- Electronic signatures can take one of the following forms: scanned image or verbal. This is used to identify the person signing the document for contractual purposes.
- To verify that the document was not altered, a digital signature can be used to check. You can track the original author by using a digital certificate.
- Because the signature needs to be certified, it may be difficult to confirm who the owner is. This can compromise the integrity and authenticity of the document.
- Digital signatures secure documents so unauthorized people cannot alter them. It is legally binding and preferable because it can be traced back to the original owner.
- A contract or document can be signed electronically by an electronic signature. Most people sign an electronic signature to confirm their intent to sign a contract.
Three Key Points to Protect the Digital Agreement
The most critical component of an Esignature program is digital signatures. They can help drive security, legal validity, records management efficiency, and record-keeping efficiency using electronic signing methods. Therefore, an electronic signature should never be created in an official setting without a digital signature. These are the three main reasons digital signatures are so crucial:
Signing at the Point of Sharing
Digital signatures are encrypted files that travel with an electronic document and return with it after the transaction is complete. The metadata of the electronic document is captured and stored in the file. It includes information about the location of the electronic document, who opened it, their IP addresses, the exact timing of the interaction, and other important information. This data is used to verify the signature's validity.
Digital signatures capture information such as the device from which an electronic document was signed, the user credentials of the signatory, and the route that the data traveled between destinations. This data provides multiple signature verification levels and protects the signing process.
Storage of the Signature Should be Protected
Electronic records need to be kept for a considerable time. The duration of electronic records varies depending on industry laws. It is essential to verify that the signature was not altered over time. The electronic signature is securely attached with a free digital signature software. This will indicate if the form has been altered. It acts as a digital watermark that seals the electronic signature. Any breach of that seal is recorded in a digital signature, making it very difficult to alter the electronic file.
This is different with all e-signature options. Many do not offer long-term validation (LTV). Ensure that the digital signing solution you select meets these requirements.
- Each signer should have a unique digital signature.
- Each entry should include details such as the digital certificate signer (i.e., a local or server-side signing cert), timestamp, and information about the signer (e.g., email address and IP address).
- To verify the authenticity of signed documents, they should be verified offline (independently of the eSignature solution). In the signature panel of the PDF, look for "Signature is enabled LTV."
Mobile Devices and Signature Protection
Smartphones and tablets have become ubiquitous technological tools. They are great for e-signing because of their convenience. They may need the necessary security and data protection features to protect the transaction. Digital signatures solve this problem by storing critical metadata in a configurable format. It can be set up to collect additional user authentication data to verify that a person is using a smartphone. This creates an operational environment where users can sign electronic forms on their mobile devices without risk.
What Types of Signatures Are Legally Binding?
The type of documents you are required to sign, as well as the level of authenticity of the document, should guide you in deciding what type of signature you want to use.
eSignly digital seals and signatures are available to help you comply with these international regulations and standards.
- US ESIGN (Electronic Signatures in Global and National Commerce).
- FDA CFR 21 Part 11.
- UETA US (Uniform Electronic Transactions Act).
- US State Professional Engineering Seals
- UN Model Electronic Signature Law
- Sarbanes-Oxley (SOX)
- eIDAS (advanced & Qualified e-signatures and eSeals).
- CNCA (Certification and Accreditation Administration of the People's Republic of China).
The Key Takeaway
It is clear that although digital signatures and electronic signatures can often be interchangeably used, they are vastly different. An electronic signature can be used to confirm terms in a document. It is the same as a handwritten signature. An electronic signature can be used to verify documents, but it can also be digitalized. On the other hand, a digital signature is made up of unique features like fingerprints that can be used to protect a document.
Digital signatures are preferred as they provide the authenticity and integrity that can be used in court. Because it has been authorized by a trusted third-party known as a certification authority, a digital signature can be verified. The type of document that you wish to sign and the expected level of authenticity are both factors that determine the type of signature that may be used. Although both digital and electronic signatures can be legally binding, the former is preferable because it is more secure.