What Is an eSignature?
Unlock the power of eSignatures and transform how you sign documents. Explore their legal validity and how they can revolutionize your document processes.
Maybe you’re in the middle of the signing process for legal documents. Or perhaps your company is looking for new forms of identity verification for your clients. Whatever your situation, you may be curious about electronic signatures and how you can use them to create binding agreements.
eSignatures are a convenient digital signing solution. They’re designed to benefit both parties involved in legal transactions. By working with a digital signature provider like Consensus, you get convenience and peace of mind.
So what is an eSignature, and how does it work?
Before we can talk about how to create an eSignature, let’s answer the first, most important question: What is an eSignature? Why should your company care, and what makes this technology important?
Let’s take a closer look.
The term eSignature describes a process for signing digital documents.
Although some people may use the terms eSignature and online signature interchangeably, these are two different things. Both provide a means for signing online documents. However, an online signature is a convenient alternative to a handwritten signature. An eSignature, on the other hand, must meet certain technical and legal regulations.
This legal framework creates an added level of security. As a result, eSignature services are better for signing contracts, non-disclosure agreements, and other sensitive documents.
Importance of eSignatures
Electronic transactions happen every day. Consider how often websites ask you to agree to terms of service, for example. Now imagine what it would be like to have to print documents, provide a handwritten signature, re-upload the documents, and fax them to their intended recipients. When you consider the different types of documents business executives send back and forth, it’s easy to see how tedious this process can be without an online solution.
eSignature software eliminates these extra steps. This software is what allows you to just click “Yes, I agree” on a website. It also allows you to click a button and create an automatic signature on certain forms or documents.
Types of eSignatures
Not all digital transactions need the same level of security. Because of that, not all digital signatures are the same. There are three main types of online signatures:
- Digital signatures
- Biometric signatures
Here’s what you should know about each of these legally-binding forms of online verification.
An electronic signature is a signature added to an electronic document to replace traditional wet signatures. Essentially, it shows that two parties are agreeing to something.
Often, electronic signatures mimic wet signatures, printing the signing party’s legal name in cursive letters across the signature field.
However, electronic signatures are not required to resemble physical signatures. According to the FDIC:
“The term ‘electronic signature’ means an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.”
Electronic signatures are meant to verify someone’s identification. They’re also meant to ensure that a person intends to agree to a contract. However, the information isn’t encrypted, and no one has to provide a photo ID ahead of time.
This doesn’t necessarily make electronic signatures bad. Think of it like asking a person to sign a document without a witness or notary on hand. It’s okay for certain types of documents.
But if you work in financial services or you’re looking for HIPAA-compliant eSignatures, this isn’t enough. For documents with higher levels of security, you’ll need to look to digital signatures or biometric signatures.
A digital signature is a type of electronic signature with higher levels of security and authenticity. They work more like physical signatures signed in the presence of a notary.
Digital signatures use data encryption methods to confirm the signing party’s identification. The first time a person begins using digital signature services, the service asks for proof of their identification. This may mean that the individual has to upload a picture of their license or state ID before using digital signing services.
Digital signatures confirm identification through trusted certificate authorities (CAs). The CAs then submit a digital certificate.
Key pairing keeps the signature tamper-free. Because of this key infrastructure, digital signatures tend to carry more legal weight than generic electronic signatures.
Biometric signatures are the most unalterable, but least convenient, form of electronic signature. To use this form of eSignature online, service providers need access to biometric data. This includes things like fingerprints, retina or iris recognition, or voice recognition.
Biometric signatures are becoming more common, especially because many phones already include voice recognition software or fingerprint technology. But these signatures have their own problems.
Conditions such as laryngitis or burnt fingertips can make it hard for some to use biometric signatures.
Biometric signatures aren’t foolproof, either. Biometric systems are prone to failure, and hackers can use online tools to mimic vocal signatures, for example. However, these tools are likely to become more powerful as technology advances.
How eSignatures Work
If you’re wondering how to do eSignatures correctly, the first step is to understand the nuance behind how these signatures work.
Most eSignature generators will do the work for you, even going so far as automatically filling in your forms. But if you understand the technology behind these signatures, you may be more comfortable using them on a daily basis.
eSignature technology starts with a trusted service provider. The service provider establishes a relationship with a certificate authority. When a company or individual makes a request for an eSignature, the service provider reaches out to the certificate authority.
Certificate authorities are trusted third parties that serve to verify a user’s identification. If they’re able to verify the ID, they send out an encrypted digital signature.
This process happens near-instantaneously on the user’s end despite the encryption and security that goes into the process. You can sign an eSignature PDF, for example, in a matter of seconds.
Encryption and Security
Certificate authorities can encrypt digital signatures in one of two ways: by creating a hash or by using public key cryptography.
A hash is a unique string of letters and numbers generated by a random algorithm. No two hashes are the same, and you can’t reproduce them. Because hashes serve as one-way encryptions, they’re nearly impossible to hack or alter.
The four most common algorithm tools are:
- Secure Hash Algorithm-1
- Secure Hash Algorithm-2
- Secure Hash Algorithm-256
- Message Digest 5
Public key cryptography, on the other hand, works by creating key pairs. This process is also known as asymmetric encryption. It encrypts information using a public key and then decrypts the data using a private key.
Both public key cryptography and hashes are hard to hack. This makes these encryption methods strong choices for protecting information.
Benefits of eSignatures
One of the reasons eSignature makers are so popular is the number of benefits they bring. Learn more about how eSignatures can cut down on costs and benefit your company.
The manual signing process is an arduous one, especially at a time when people need to be able to sign more documents than ever before.
To get a physical signature, the business and signing party must either be in the same location or have access to printers and scanners. As a result, the process is inefficient.
And if the printers or scanners aren’t high-quality, there are more problems. You can find yourself with blurry legal documents that are hard to read and even harder to enforce.
eSignatures eliminate these barriers. Two parties can sign documents asynchronously from anywhere in the world at the touch of a button. This means faster responses, which can be critical in a number of industries, from real estate to medicine. It also means both parties can sign the documents in an eco-friendly, paperless manner from any device connected to the internet.
eSignatures also enhance security. eSignatures aren’t just harder to alter than generic online signatures. They’re harder to alter than wet signatures, too.
Online verification pairs with data encryption so that all documents have a clear, tamper-free audit trail. A frustrated landlord can’t tamper with a document using Wite-Out or a digital photo editor. Documents are encrypted and time-stamped to keep information safe.
Compared to physical signatures, digital ones are less expensive.
Wet signatures require physical documentation. This means that both parties must pay to print and store those documents. Costs include:
- Filing Space
If you don’t already have a printer, scanner, or fax machine, you instead need to pay for travel and printer service fees. Depending on how many documents you sign per year, these costs can add up fast.
Using eSignature services eliminates these extra costs. All you have to pay for is access to a service provider.
Improved Customer Experience
Customer experience is a critical component of any business plan. And when it comes to what makes for a great experience, convenience is at the top of the list. In fact, 82% of shoppers across all demographics say convenience is very important or extremely important to them.
If you’re asking customers or clients to sign a contract and your expectation is that they will print the document, sign it, scan it, and send it back to you, “convenient” is probably not the word that comes to mind. And if you’re expecting them to drive to your office every time they need to sign a document, the experience is even less convenient.
But if they can sign documents on the go from whatever phone or mobile device is closest to them, the customer experience is much more accessible. This improved customer experience can help you stand out from your competitors while providing a trustworthy service for your customers.
Legal Validity of eSignatures
There are a number of laws, both in the United States and globally, that give eSignatures the same legal validity as wet signatures in most cases.
The E-SIGN Act (the Electronic Signatures in Global and National Commerce Act) lays out eSignature requirements, protecting consumers doing business with organizations that use these services. These requirements include data encryption standards which make electronic signatures even more difficult to forge or alter than manual signatures.
UETA, on the other hand, grants the same legal recognition to both e-signatures and wet signatures.
Although there are legal stipulations to using eSignatures, working with a trusted service provider like Consensus ensures legally binding signatures for all of your electronic documents.
Use Cases for eSignatures
People can use eSignatures in a variety of ways, from signing legal documents to transferring medical records. Understanding these different use cases can help you determine what types of signatures are right for your brand, as well as whether you may need to invest in any advanced features.
Businesses send countless contracts back and forth. These contracts may need amendments or addendums, each requiring separate signatures. Traditional, wet signature methods for transmitting these documents are time-consuming and frustrating. This is especially true for businesses working out of separate time zones.
eSignature software allows business contacts to sign documents anytime, and from anywhere in the world. In an industry where time is money, this increased efficiency is key to staying competitive.
One of the challenges to sending and receiving legal documents is that they leave a paper trail. This is especially problematic if you work on high-profile or especially sensitive cases where people would be motivated to steal or alter those documents.
Using cloud-based eSignature technology to transmit documents instead protects your clients’ information. Encryption technology ensures that even dedicated hackers aren’t interfering in your case or altering your documents.
Banks and other financial institutions create and sign numerous documents each day. If they rely exclusively on wet signing methods, their days can easily become overrun with tedious administrative tasks. This means they can serve fewer customers each day and provide a lower service quality.
eSignature technology expedites these processes. Workers in the financial industry can send documents and then move on to the next task rather than waiting for the signing party to come in. Autofill technology walks customers through the signing process, ensuring that no lines get missed and that every stage of the transaction is smooth.
Healthcare and Medical Records
Healthcare information and medical records can’t wait. For example, by the time an ER patient’s PCP sends their records in the mail or walks them over to the hospital, their emergency could reach critical levels.
HIPAA-compliant eSignature software allows medical providers to transmit information quickly without sacrificing privacy. Patients can sign waivers on the go, enabling providers to offer informed, quality care in a timely fashion.
Government Forms and Applications
Most government offices are underfunded and underserved. Challenges like government shutdowns and spending freezes can delay processes exponentially. If you add the challenges of paper documents and wet signatures on top of that, government forms and applications can move along at a snail’s pace. At the same time, forms and applications have to be protected.
With eSignature technology, individuals can sign these documents with a click of a button. This means shorter waits in government offices and smoother operations. eSignatures also prevent government officials from having to keep manual copies of every document on hand. Digital storage solutions are more efficient, making this process a strong fit for governmental departments of all kinds.
Try eSigning in the Cloud Today
Signing documents electronically is more convenient than signing them in person. And with encrypted eSignature software, all information you send is protected as well.
Ready to take the leap and enjoy convenient e-signing today? Consensus has paired with JSign to bring you top-of-the-line, cloud-based eSignatures. This eSignature technology is fortified with auto form-fill and blockchain technology. It integrates into existing software, including Dropbox and Google Docs, to make signing documents easier than ever before.
You can build unique signature processes for your workflows, configure two-factor authentication, track your documents, set due dates, and even save signed documents in the jSign cloud. What’s more, you can do it all from one convenient platform. Get started with JSign today.