Electronic Signature and Scanned Signatures: The Ultimate Guide | Definitions, Benefits, Challenges, and more!

Electronic Signature and Scanned Signatures: The Ultimate Guide | Definitions, Benefits, Challenges, and more!

Awesome Sign

Published on:  

February 1 , 2022


10 min read

Electronic Signature and Scanned Signatures: The Ultimate Guide | Definitions, Benefits, Challenges, and more!

The rise of digital documentation across the world has shifted the way we sign our paperwork. Paperless forms or digital forms are a lot more common than they were in the early 2000s. In fact, a report by Fortune Business Insights found that

●     In 2019, the global e-signature market was worth 1.10 billion dollars,

●     And it is expected to grow to 7.99 billion dollars by 2027.

Digital signatures in word, pdf, and other formats are popular worldwide because of their convenience. Another factor is the type of digital signature that is in use globally as Adobe’s 2021 report shows the following:

●     The commonly used e-signing technique in Australia was a typed signature that consisted of their name.

●     In contrast, Indians and Singaporeans tend to scan a written signature and upload its image for use.

Both typed and written signatures fall under the umbrella term of "Electronic signatures." You can type your sign directly in the space provided in a document. In contrast, you can also upload a scanned image of your written signature in the area for uploads.

But first, let's understand what these terms mean. For easier understanding, electronic signatures are typed or written electronically. And scanned signatures refer to the signatures written on paper and uploaded as an image.

What is an electronic signature?

The European Union defines simple electronic signatures as, "Data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign" (eIDAS Article 3).

Although they call it simple, the definition sounds tough to comprehend. In simpler terms, electronic signatures are typically the digital version of a legally binding pen and ink signature. A significant reason for its growing use is the need for paperless documentation due to the ongoing pandemic. But, for e-signatures to be legally binding, they need to meet the following standards:

●     The intent to sign- this means that the person signing the document intends to verify their identity.

●     Clear and absolute consent from the signatory- this refers to the readiness of the person willing to sign the document for business or personal purposes.

●     A record of the e-signature within a system that retains the integrity and credibility of the signature.

The USA as well as the European Union accept electronic signatures as legally binding proof. The United States has granted e-signatures the same level of legality as the handwritten signature with the help of the ESIGN Act.

Whereas the EU currently accepts what is known as "digital signatures" under their Electronic Identification and Trust Services Regulation (eIDAS). They detail three security levels which are: simple(SES), advanced(AES), and qualified(QES) electronic signatures. But the EU only accepts the QES that is the qualified electronic signature, as legally binding. This is because of the following reasons:

●     A simple electronic signature requires no verification for its use. It is the most convenient and commonly used signature method but offers the lowest level of security. The simple signature does not fulfill the standards set for legally binding electronic signatures in the EU. We generally use simple signatures for employment contracts and leases.

●     An advanced electronic signature contains a unique link that belongs to the signatory. It has to be connected to the signatory clearly to help identify them. It should not allow any modifications and show explicit consent of the signatory. Advanced e-signatures are for complex procedures like opening bank accounts or life insurance.

●     Lastly, the qualified electronic signature is made using a qualified electronic signature creation device. Qualified electronic signatures are legally binding because they are made after gaining certification from authorities. They use a cryptographic key for this purpose as proof of the QESCD (Qualified Electronic Signature Creation Device). Qualified electronic signatures are rarely used, and mostly used only for law-related acts or actions that require high levels of security for the public.

So, to summarize, most people use simple signatures more often than any other kind of signature. Electronic signatures are a vital asset to businesses worldwide with the rise of digitization and the global pandemic. If you're still wondering what an e-signature means in reality, let's understand with an example.

Imagine you've just gotten an offer to work for your dream company. You might expect a physical copy of your contract, but instead, receive an email with the offer letter. The contract template is an adobe pdf with a blank space for your signature at the bottom. You can either type your name out or use the mouse or a stylus to write it out. Once you sign, the document becomes evidence of your acceptance to work for the company.

Now that we've understood what an e-signature is, let's move on to its benefits and challenges.

Benefits of Electronic Signatures

  1. E-signatures are accessible worldwide. You can generate an electronic signature wherever you are and whenever you're free. This means that you can now get legally employed by countries abroad and respond to them from the comfort of your home.
  2. We can retain an e-signature even after decades have passed. They do not require any upkeep or care in comparison to written signatures that can deteriorate over time. The software or system storing the signature does not require any monitoring.
  3. It is a sustainable method of signing your documents. Going paperless is an imperative initiative to battle issues like global warming. It also guarantees the integrity of the signature over time.
  4. Businesses in the United States lose $8 billion a year on paper management alone. Instead, you can invest in a cost-effective option by signing your documents electronically. Additionally, you don't need to use printer equipment and ink by switching to e-signing.
  5. Improve your customer satisfaction levels with the convenience of an e-signature document. Employees too can experience smoother onboarding with the help of electronic verification and documentation. Your overall company documentation processes can shift online, and access to information becomes easily available to all.
  6. Younger generations are especially receptive to such options as research     shows that- around 61% of Millennials use e-signatures to sign their documents. The Gen Z crowd has already begun their e-signature journey as schools too shifted to this method during the pandemic.
  7. The best advantage of e-signatures is the organized system of documentation. As I've mentioned in point 5, documenting company policies, onboarding processes, accounts, and HR can all shift their paperwork online. It acts as a digital archive for all your documents. Installing documentation software alongside e-signing options you can grant access to documents only to the necessary employees and even increase customer privacy.
  8. Finally, qualified electronic signatures (QES) are legally binding in the EU. The US also accepts electronic signatures when the signatory provides "affirmative consent", and the document has been recorded and retained.
  9. A significant statistic to note is that we take around 37 minutes to obtain documents that are signed electronically. Conversely, written signatures can take up to 5 days to receive and process. Electronic signatures help you increase workplace productivity and reduce manual labour.

The benefits of e-signatures are varied, but they do come with a couple of challenges.

Challenges when using Electronic Signatures

●     Electronic signatures require both the sender and the recipient to have a device that allows them to sign the attached document. E-signatures can be hard to access when you do not own an electronic device. This also applies to those who do not have a stable connection to the internet to receive the document.

●     The EU only accepts e-signatures as legally binding when it is done using a qualified electronic signature creation device. If you cannot access said device, you will have to write your signature by hand.

●     People who are not technologically adept may find it hard to use e-signatures. One can get over this with the help of tutorials online and self-help guides.

●     E-signing software is relatively cheap, but documentation software can become expensive when it manages several documents. There are multiple options out there for documentation software alone which can also be confusing to pick from.

●      Privacy and security concerns do arise from the storage and use of electronic signatures. People worldwide fear the misuse of their information which can make some wary about signing documents electronically.

The disadvantages of electronic signatures mostly revolve around device accessibility and security. But e-signatures are protected and sealed when done for legal purposes and chances of misuse are relatively low.

What is a scanned signature?

As I've mentioned before, a scanned signature is a handwritten signature one scans and uploads as an image file. Scanned signatures are not legally binding, unlike electronic signatures for the following reasons:

●     There is no way of knowing the signatory's intention. There are high chances of not being able to identify who signed the document.

●     We cannot assess the level of consent if we can't identify the signatory.

●     The integrity of the sign can be compromised if it isn't recorded within a system.

Both the US and the European Union do not accept scanned signatures as legally binding for the same reasons. Scanned signatures fail to offer proof in comparison to an electronic sign. The scanned sign is considered a copy when handwritten and uploaded. In contrast to a handwritten sign, you submit in real life, which is accepted because you are in the presence of the witnesses.

It may seem like there are only few differences between the two defintions. But the difference between e-signatures and scanned signatures come down to their pros and cons. So, before we decide what's the better option, let's delve into the benefits and challenges of scanned signatures.

Benefits of Scanned Signatures

  1. Scanned signatures only require the image of the sign in a scanned copy. Similar to the electronic signature, scanned signatures can be uploaded at any time, place, and occasion. It is commonly used by school and college-going students who need to upload images of the course work or test papers with a signature.
  2. Documents that contain a scanned signature are also safe from any alteration in their appearance. Once you upload the image to a filing system or software, you can retain it whenever necessary.
  3. You can re-use the same image for any document, so it is not necessary to rewrite your signature each time. This increases convenience and ease of use for customers and employees.
  4. Scanned signatures are remarkably helpful to those who aren't digital natives. Customers who are not accustomed to digital products do not have to learn anything new to scan and sign a document. For example, if it is an elderly person all they need to do is write their sign. Their children, relatives, or the authorities can help them by taking a photo and uploading it in the document.
  5. Lastly, scanned signatures are also helpful in organizing and documenting your forms and processes. These scanned copies can be stored and retrieved whenever needed, making them ideal in the long run.

These were some of the significant benefits you can attain while using scanned signatures for your documents.

Challenges of Scanned Signatures

  1. Scanned signatures are not sustainable or paperless methods of signing documents. The initial signature requires paper which goes directly against the advantages of e-signing.
  2. Scanned signatures are not legally binding as they are susceptible to forgery. Anyone can copy and upload a stranger's signature without explicit consent or knowledge.
  3. They are not secure methods of signing critical documents for bank account openings or life insurance. As I've mentioned above they can be easily forged and tampered with by criminals.
  1. Scanned signatures typically entail little to no verification of the signatory’s identity. This makes it tricky to understand the signatory’s intentions and need for signing the necessary document.
  2. Scanned signatures fail to protect the signatory's data as they can be shared with other viewers by the receiver. This means that anyone can get a hold of your written signature and use it for their needs.
  3. Finally, scanned signatures also require electronic devices and stable internet connectivity. You cannot upload a document without the needed device and network to send it across.

This leads us to the final verdict on scanned and electronic signatures. If you're still debating what option works best, look no further because e-signatures will always be the safer option.

Why electronic signatures are better than scanned signatures

We can break down the five major reasons to choose e-signing over scanned copies in the following points:

  1. Electronic signatures, unlike scanned signatures, do not cause any wastage. They are paperless processes for documentation and require little to no effort.
  2. Scanned signatures are considered copies by authorities worldwide and hence, fail to be legally effective. E-signatures, on the other hand, are legally binding when the signatory meets certain standards.
  3. Electronic signatures guarantee a high level of security and protect your data. E-signatures follow legal procedures and are require verification before use, which makes it difficult to misuse them. In contrast, scanned documents can be misused, distributed, and tampered with due to their lack of verification.
  4. Scanned signatures are often invalid as they are done with digital signature makers or signature creators that show no proof of certification. Electronic signatures can show proof of validity with the help of devices like the QESCD.
  5. Finally, customers and employees will prefer the convenience of an e-signature over scanning a photograph. You can improve customer satisfaction levels, and gain their approval much faster by asking them to sign documents electronically.

Ultimately, signing documents should be convenient and safe for the signatory. The rise of cyber-crime and data theft is a cause for concern worldwide. Making it every company's responsibility to protect customer data and for customers to store their data wisely. Electronic signatures offer you definitive legal validity and protection to meet this need.

Scanned signatures are a great option for those who are not digital natives and need help signing documents. But these documents may end up causing more harm than good if the wrong person accesses these documents. Electronic signatures are the way to go if you're looking for legal validity and surety.

If you're now wondering what are some great tools you can use to e-sign your next document, you've come to the right place! Awesome Sign is one such tool that helps you e-sign your documents effortlessly. Awesome Sign lets you edit, sign and manage your documents on any device effortlessly. Click here for a free trial and experience awesome options to sign all your future documents.