February 1 , 2022·
10 min read
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.
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.
The benefits of e-signatures are varied, but they do come with a couple of challenges.
● 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.
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.
These were some of the significant benefits you can attain while using scanned signatures for your documents.
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.
We can break down the five major reasons to choose e-signing over scanned copies in the following points:
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.