What is an e-signature? Benefits and risks

Anton P. | September 7, 2020

The global adoption of e-signature (electronic signature) software slowly reduces the need for handling paperwork in hard copy. For many, document workflow automation is a practical solution for approving onboarding, business, and personal contracts. While abandoning the traditional pen-and-paper approach works a durable and effective solution, not all are ready to switch. People are anxious about forged e-signatures on legally binding documents and their fallout. Here is everything you need to know about the security and common pitfalls of this digital process.

What is an e-signature?

First of all, let’s kick things off with some terminology and context. E-signature is a technology that allows people to sign digital documents without any physical interaction. In other words, it refers to a variety of electronic techniques for verifying contracts. Users sign documents by drawing signatures with their mouse/finger or adding images of signatures.

Electronic signatures hold equal status to handwritten ones, meaning that they are just as legally binding. This position is operative in most European countries, the US, and other parts of the world. However, e-signature incorporation is a monitored procedure. One of the requirements indicates that parties must consent to the usage of electronic means instead of pen and ink.

Is e-signature the same as a digital signature?

A closely-related term is a digital signature that conveys a slightly different approach to approving contracts.

  • E-signature refers to any electronic means that a user adds to a document as a sign of approval and verification. The phrase “any electronic means” might seem confusing: can it be anything? Usually, e-signatures reflect acceptance via marks captured through checkboxes, typed names, or attached signature images. These signs of approval are legally binding and represent a person’s intention to sign the document. However, the broad spectrum of means raises red flags: tampering and forgery seem relatively easy to execute.
  • Digital signatures are different as they integrate Personal Key Infrastructure (PKI) into the verification process. This technology enforces stricter authentication by generating two unique keys for identifying the signees. Since this procedure involves the encryption of keys, it is less prone to forgery. Hence, some enterprises only support digital signatures for approving highly confidential documents and financial transactions.

Benefits of electronic and digital signatures

  • Time-saving option. E-signatures expedite the document turnaround time, allowing people to sign documents in just a few clicks. The typical approach would force you to print, sign, scan, and mail the copy to the recipient.
  • Going paperless. While experts emphasize the automated document flow and efficiency gain, there is an eco-friendly perk. Companies and people can save money from paper, packaging, and shipping fees. With the contact processing going paperless, environmentalists agree that e-signatures could reduce paper consumption if globally adopted.
  • Secure document flow. Paper documents are easy to misplace and difficult to modify. After both parties sign a form and notice a mistake, they might need to draft a new contract. E-signatures allow parties to alter the documents and track adjustments made. Additionally, since digital signatures apply encrypted keys for authentication, there are fewer forgeries.
  • Higher customer satisfaction. Being able to sign a contract with an e-signature is a pleasant surprise to most users. More and more people prefer the online environment for the completion of documentation procedures. So, by offering options to sign contracts remotely, companies gain respect from their clients. Amid the COVID-19 pandemic, the integration of e-signatures and proper authentication received tremendous support. Chances are, you have used such means to sign a contract before.
  • Reducing storage for hard copies. With the document properly authenticated and signed, companies or users need to store them. With the paperless approach, all files are digital and do not require any physical space. Also, if the original copies get lost, companies usually have back-ups for emergencies.

The integrity of e-signatures: should you use them?

While e-signatures are convenient, they are not ahead of the pack in the security department. They are replicates of the pen and paper approach, minus the physical objects involved. As a result, they lack authentication of the signees Digital signatures are the ones that integrate certificates and encryption to the signed contracts. Extra “fingerprinting” techniques make the signing process more immune to forgery and tampering. Hence, opt for digital signatures whenever possible. Also, for completing all online transactions safely, a VPN is the way to go. It will encrypt all web traffic and prevent snoopy entities from reading documents that you sign.

Anton P.

Anton P.

Former chef and the head of Atlas VPN blog team. He's an experienced cybersecurity expert with a background of technical content writing.


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