Ever thought about how some companies get through the day saying “sign here” and “initial here” to all of their employees? The age-old practice of having to sign new documents, update copies, and essentially forge the signature of whoever signed the contract before you are fading into obscurity. We are left with something much greater; electronic signatures are here to help us move more streamlined fashion, providing several benefits along the way. This article will walk you through the importance of electronic signatures and why they are the future of business.
What Are Electronic Signatures?
An electronic signature, also known as an e-Signature, is a unique identifier that allows you to digitally sign documents and contracts, just like an ink-and-paper signature. It’s like a digital fingerprint—unique to you and your own, so it can’t be faked or forged.
This process is often used with digital transactions, such as online payments, wire transfers, and e-commerce transactions. It helps protect both parties from fraud because they can access the same information without ever having met face-to-face.
How Electronic Signatures Work
Electronic signatures work by digitally signing a document with your name and address, which allows it to be legally binding. You can also use them to sign documents remotely, so you don’t have to be present physically signing the document.
Electronic signatures work is simple: they take your information (name and address) and combine it with a hash code that shows that you approved the document in question. This creates an electronic signature that will only work for documents you approve.
The process involves using a digital pen or stylus to sign a document on a tablet or computer screen, which then generates an electronic signature stored with the document.
How Do You Know If An Electronic Signature Is Valid?
While e-signatures offer enhanced security over traditional ones, how do you validate it? How can you tell if the e-sign is valid and done by the intended person or not?
There are a few ways to verify that an e-signature is valid. First, you can check the signature’s validity by looking at the signature’s metadata. This will tell you when the signature was created and who signed it.
The thing is that when you sign a document digitally, the signature also includes other relevant information, such as:
- IP Address
- OS and browser information
- Time and date stamps
Second, you can check the certificate of the person who signed it. You can view this certificate on your computer or mobile device.
Take the example of e-signature in Adobe PDF files. When you sign a document in Adobe Acrobat Standard or Professional, your signature becomes part of the PDF file.
When you open the file, your signature is automatically checked against the information in your certificate. If the information matches, the signature is valid and will be accepted by Adobe Acrobat. If there’s no match, then you’ll see an error message.
You can also check an existing signature by opening the PDF file and selecting Verify Signature from the Edit menu. This will open up a dialogue box that displays all the information about your certificate and compares it to what’s in the PDF file.
The Increasing Use Of Electronic Signatures
Electronic signatures have been introduced for ages now. It was first described back in 1976 by Whitfield Diffie and Martin Hellman. Later in 1988, Lotus Notes 1.0 was the first widely accepted software application offering digital signature capabilities. The software used the RSA algorithm for this.
However, only in 1999 and 2000 were digital signatures enforced as legal binding with the introduction of the EU Directive for Electronic Signatures and the ESIGN Act, respectively.
Although in existence for decades, it was only until recently that electronic signatures were used ubiquitously. According to a recent DocuSign survey of over 2000 participants, over 65% of current e-Signature users started using it only within the past two years. The survey also highlights that most businesses use e-Signatures for enhanced security features.
Covid-19: The Factor Behind Increased Adoption
The increasing e-Signature adoption is primarily influenced by the recent pandemic that took the world by shock. Most companies had to start working remotely overnight due to Covid-19. Moreover, lockdowns were imposed in most parts of the world to prevent the spread of the virus. This reduced the chances of being physically present to sign traditionally and increased the adoption of e-Signatures.
A recent study shows that over 50% of businesses adopted digital signatures during the pandemic. The adoption in individuals also increased by 13%. It is also believed that those who adopted electronic signatures due to Covid-19 will likely continue using it in the post-Covid world.
The numbers hint that using digital signatures is not just a fad; it is the future of business. We can also see the same in the market projection.
Why Electronic Signatures Will Be An Integral Part Of Businesses
As more and more businesses turn to digital, it’s becoming increasingly important to have a way to verify documents electronically.
There are several reasons why e-Signatures will be an integral part of a business. However, the most significant reason is the plethora of benefits they bring to the table. Here are some reasons why digital signatures will be an integral part of businesses.
- You’ll save time and money by eliminating the need for physical signatures on documents. Without eSignatures, many currently paper-based processes would be incredibly time-consuming and challenging to manage.
- You can easily track all documents sent through your system to see who has signed what and when they signed it.
- Documents can be encrypted on your server to protect them from prying eyes.
- The process is secure—you only need one person’s password to access the documents they’ve signed (and you’ll only give out that password if someone asks for it directly).
- Electronic signatures are legally binding in many countries worldwide (including the United States).
- You can use the system for any document, not just contracts or agreements.
- It’s easy to share documents between multiple users, so you can add colleagues for feedback and input before signing off on anything.
- Electronic signatures are more accessible to track than physical ones, so if there are any problems down the line (like someone claiming they never received something), you’ll have an easier time proving that they did receive it all along.
Hopefully, by the end of this blog, you will know a little bit more about electronic signatures. More importantly, we’ve also answered some underlying questions about how they work and why they are so crucial to today’s world. Anyone that examines the significant trends we see in communication technology will admit that they are not going away anytime soon. If anything, they will only get more complex and powerful as businesses deploy them at increasing levels.