Looking to create an electronic signature for your next online transaction? This guide will show you the different types of electronic signatures and how to use them.
As years go by, we see constant evolution in how we sign documents and contracts worldwide. It wasn't long ago that bosses "signed" documents employing ink and a rubber stamp. They would commit their stamp to another "approved user" who might stamp or "sign" papers on their behalf in order to speed up the signing procedure. The idea was that if someone had accessibility to the stamp pad, they must be a registered user with the authorization to sign contracts and other legal papers. But with the turn of the 21st century, we can see brand new ways of authorizing paperwork without paper.
When you hear the terms 'digital signature' or 'electronic signature,' it's tempting to believe that these terms are the latest in a long line of technological breakthroughs. The COVID-19 outbreak, on the other hand, has only increased its importance. But, a digital, electronic, or online signature is a concept that has been around for quite some time.
Electronic signatures were initially proposed by American cryptologists Whitfield Diffie and Martin Hellman in 1976. Aspects like public-key encryption and cryptographic signatures were discussed in their research article, 'New Directions in Cryptography.' Electronic signatures were widely used by 1999, and they were integrated with PDF documents. These electronic or online signatures have proliferated into different aspects of our daily lives in 2022.
E-signature or online software eliminates the necessity for physical distribution by allowing users to access, sign, and transfer documents digitally. When you can assure that a document or other paperwork demanding electronic signatures is exchanged and maintained securely, delivering it becomes even more efficient. Aside from helping to create a sustainable work environment, e-signature software also relieves the pressure of waiting for the receiver to sign and deliver the document without knowing if it was received or sent.
Briefly explained, an electronic or online signature is a digital version of signing a document without using a pen and paper. A laptop, tablet, or smartphone can be used to capture electronic and online signatures. They assess and authenticate the signer's intentions while also maintaining records. Because signing and tracking papers on the go can be convenient or even necessary, e-signature providers are continuing to enhance their solutions with native iOS or Android apps or mobile browsers. E-signature software gives users a faster way to prepare, send, sign, and verify papers, agreements, and contracts when compared to the traditional pen and paper signatures.
For instance, you may sign your first internship contract online with the help of a pdf signature tool. Companies worldwide offer online signing opportunities for their employees, customers, partners, and more. These are just some examples of who could use an online signature for important documentation purposes. We'll delve into the different online signature use cases in the next section for better insight into who can benefit from them.
Most of us are aware of what people call simple electronic signatures or the usual online signature. But in reality, there are several kinds of signatures that we use depending on the occasion. A simple online >signature will suffice for onboarding employees but a QESCD is necessary for certain legal documents. So let's get right into the three major types of signatures and the different kinds of sub-categories within >them.
Wet-ink or handwritten signatures
A wet signature is when someone signs their name with a pen ("wet ink") on a tangible piece of paper. A person uses wet ink to directly mark a paper, generally by signing a name in cursive. Penned signatures are almost never required to complete contracts and agreements nowadays, as numerous forms of electronic signatures have taken their place. Contract administration has become considerably more simplified thanks to the ability to sign a document or give permission online. As a result, businesses that still rely on wet signatures are sacrificing precious time and energy.
Electronic or online signatures
The phrase "e-signature" relates to any means of electronic authentication used to verify a contract or agreement. That method just requires the signer's identity to be verified, which may be done using anything from a business ID to a confirmed email account Appropriate, multi-factor authentication can be added to e-signatures to correspond with heightened security standards while also generating an audit trail.
Electronic signatures are also known as online signatures as we require the internet to carry out the process of delivering a document that has been signed electronically. Additionally, certain e-signature software works and stores signatures online or on the cloud making it all the more efficient. Under this category, there is also the "click or type to sign" option. Ticked checkboxes, e-squiggles, scanned photos, and typed names are examples of these. The content is not protected by cryptography in this type of signature. As a result, such signatures are insufficient to offer convincing evidence of who signed the document or even to preserve it from later changes. They're simple to copy and paste from one document to another.
E-signature is an easily accessible and affordable type of digital signature. Digital signatures, on the other hand, are a more advanced form with extra security features. A certificate-based personal ID is often required for digital signatures, which provides an extra layer of security to the authenticity verification process. The digital signature is next authenticated by a trusted service provider (TSP), which is usually a trusted entity or certified authority (CAs).
Online signatures and electronic signatures can be used for a variety of commercial applications. Digital signatures, on the other hand, are frequently used in procedures with increased risk factors. Financial approvals, financial transactions, HR management processes, and medical signatures are just a few instances of highly tightly controlled corporate processes.
Simple or standard electronic signatures (SES)
The use of a simple or standard electronic signature does not necessitate any verification. It's the most convenient and often used signature method, but it's also the least secure. The simple signature fails to meet the EU's requirements for legally binding electronic signatures. For employment contracts and leases, we typically utilize simple signatures. While an SES may pass the legal test, the risk of fraudulent activity is increased because the signer's identity is more easily fabricated.
Advanced electronic signatures (AES)
In comparison to SES, this e-signature adds more stages to secure user verification. The AES demands the signer's existence to be validated, which is a significant difference between SES and AES. To be recognized as an AES, the signature must be:
- Distinctively linked to the signatory,
- Ability to recognize the signer,
- Invented utilizing electronic signature creation information that the signatory can use under their direct command,
- And linked to the information signed to trace any subsequent changes, according to the eIDAS Regulation.
These standards reduce the risk of fraud and strengthen the agreement's legal validity. AES can be used for a variety of things, including job applications and entering a one-time passcode to verify identity before signing into systems.
A unique link belonging to the signatory must be included in an advanced electronic signature. It should be clearly linked to the signatory in order to aid in their identification. It should not enable any changes and must demonstrate the signatory's unambiguous agreement. Complex procedures, such as creating bank accounts or purchasing life insurance, require advanced e-signatures.
Qualified electronic signatures (QES)
Finally, a qualified electronic signature generating device is used to create the qualified electronic signature. Because they are created after receiving certification from authorities, qualified electronic signatures are fully legally binding. They utilize a cryptographic key as verification of the QESCD for this (Qualified Electronic Signature Creation Device). Qualified electronic signatures are used infrequently, and usually for law-related acts or actions requiring high degrees of public security.
This sort of e-signature offers the highest level of security and is the only one recognized by the EU as being tantamount to a wet ink signature. QES is unique to the European Union and does not exist in the United States. To be designated a QES, the SES and AES standards must be met, as well as extra requirements for the device that delivered the signature.
QES is established with an electronic signature device and necessitates vetting procedures by a Qualified Trust Service Provider (QTSP). The additional restrictions put on QES increase the authenticity of the data and reduce the risk of deception or tampering. Because QES is the only type of e-signature recognized by the EU as being comparable to a handwritten signature, it should be used for legal purposes.
These are the four major types of signatures in use worldwide. In current times the wet-ink signature poses more problems than benefits to the signatory. In comparison, electronic, online, and digital signatures are far more accessible and straightforward for users globally. Qualified signatures are rarely necessary outside the EU and even there it is not s commonly used signature. In comparison, simple standard electronic signatures are widely used and have software built to help signatories achieve smooth documentation processes. So what are the types of online signature software and what should you consider when buying such software?
These are the major types of e-signature software
On-premises software, commonly known as "on-prem," is software that is deployed and operated on the organization's premises – for example, within the organization's headquarters. On-premises e-signature tools are deployed on hardware that the customer owns and maintains. Most customers that use on-premises tools pay a yearly servicing cost and acquire a perpetual licence depending on the number of users. Customer tools that demand software to be deployed on each user's PC or browser-based services are examples of on-premises solutions. On-premise software is more commonly used by large-scale enterprise-level organizations that have >large volumes of documents.
Cloud e-signature technologies function in a browser and have a software as a service (SaaS) price structure. The majority of new online signature solutions were developed on the cloud. The cloud pricing structure is often based on a monthly fixed charge per user. Cloud services are simple to set up, don't require any equipment, and let you pay for overtime depending on consumption. Multiple persons can sign papers from >different locations using cloud-based solutions, whilst desktop-based alternatives allow you to modify and sign a document on your own tablet, computer, or smartphone.
Most small-scale and mid-sized businesses are better off investing in cloud-based solutions due to the lack of space and equipment. In general cloud solutions tend to be more secure as well making them a viable >option for bigger businesses as well. So what is the best type of online signature software for you?
When it comes to purchasing e-signature software, there are a few things to keep in mind. In an evaluation of E-Signature Software, the following features are critical.
Does it work across devices?
To begin, consider platform compatibility. What operating systems is the software compatible with? Is it compatible with Windows, Mac OS X, Android, iOS, and other platforms? One of the primary things to look at is your solution's ability to work across devices and platforms. With extra assistance, you may rest assured that everybody who gets your documents will be able to sign them without difficulty.
Recognize your requirements
Wasting money on functions that aren't necessary is a waste of money. Examine your genuine requirements. Will you be dealing with a large number of documents? Does your company require strong branding capabilities? Do you need white-labeling features? Or do you just need to sign documents on the go? Once you figure out what your unique needs are, you'll be more focused on selecting a product that gives you the most bang for your buck.
Is your e-signature solution allowing you to keep your brand consistent throughout the e-signature process? Customization is important for lowering abandonment rates, and a fully tailored e-signing procedure can assist develop client trust in the transactions made and increase adoption rates.
One of the main advantages of e-signatures is the ability to sign paperwork in real-time, but a software package with a bad user experience or user-friendliness might negate this benefit. Is it easy for all users to use the e-signature solution? Is it simple to use and available to anyone who submits signature inquiries or signs company documents? Is it simple to design and operate for IT professionals? These are the questions you must answer before purchasing the software.
Compliance and legality
Is the online signature solution compliant with all signature types specified in significant e-signature legislation, such as eIDAS, UETA, or the Electronic Signatures in Global and National Commerce Act (ESIGN Act)? Also, make sure your e-signature system adheres to industry-specific standards relevant to your use case. For example, in a healthcare setting, how will your e-signature system comply with HIPAA requirements?
Other Software Platforms Integration
Is the online signature solution API-enabled and SDK-supported, allowing developers to quickly create integrated solutions? Do they provide pre-built interfaces for popular corporate systems such as Salesforce, as well as sample code and developer team support? Are there any extra charges for programming environments? If you're already using a CRM or other software, you need to choose a solution that can access data from such systems. So lookout for the in-app integrations when you make your purchase.
These were some of the significant aspects to go through when selecting an online signature software. But this brings us to the next question, how will these solutions help you? Who are the most common users of e-signature solutions? We'll answer these questions in the next section of this post.
Online signatures are essential for several types of people and teams across industries. Although the legal sector is yet to completely accept all kinds of e-signatures, most e-signed documents are legally binding when they meet the required standards. So let's look at the different people and businesses who use online signature software.
There's a high chance of freelance and independent workers carrying out tasks remotely. Which makes it all the more difficult to onboard or partner with them using a traditional handwritten signature. Online signatures are a boon for most freelance agents and independent workers who deal with multiple contracts over the years. In the fast-paced and complex world of independent consultants and freelancers, responsibilities such as completing tax returns, submitting bills for services, and organizing details with vendors are all part of the job.
Wasting time on paperwork is the furthest thing on a freelancer's agenda. Handling it alone can be difficult, primarily once you have to keep a record of all the regulations. It's easy to forget to secure all of >the necessary approvals before beginning a project. Acquiring a sign-off gets much smoother with a robust online signature solution, allowing you to keep audit trails of all your contracts, proposals, and invoices. >Online signature solutions can help you keep track of all your documents in one place at an affordable price.
Small scale businesses and Start-ups
The online signature has evolved into a critical instrument for small business sustainability. It improves the efficiency of small enterprises by saving them both energy and expenses. Businesses can close agreements >and get agreements signed online in a quarter of the time it took in the past utilizing time-consuming and inefficient paper processes.
Online signatures also conserve money since they eliminate the expenditures of office supplies, faxing, and mailing. In a world of increased competition, the energy and cost that eSignatures save a small firm can >make a major difference. Many small organizations have a single person in charge of document management, which makes them ideal candidates for a lower-tiered e-signature software membership.
Some small organizations do not require a large number of electronic signatures, depending on their industry, demonstrating how a single-user software licence is ample to suit their demands. Small firms using the new e-Signature systems have a significant edge over others who have not yet made the transition to more efficient signature solutions. Online signatures enable small firms to be more efficient, giving them a competitive advantage.
Mid-sized or medium-scale businesses
According to recent research, the use of e-signature technology in small and medium businesses (SMEs) would increase by 30% in the next five years. Valid and reliable ID and United VARs have discovered that, as a result of the rise in remote employment over the last 18 months, many fundamental activities of SMEs, such as HR and sales, have begun to employ online signatures, based on figures from Fortune Business Insights and their own professional experience.
According to them, this technology was once only utilized by large corporations in their distribution chain, purchasing, and accounting departments, but it is now more versatile and adaptable to various areas of business. Many e-signature vendors offer tiers of service, which may be appealing to medium-sized organizations with a small team of people who handle the majority of document signing and maintenance. This sort of company may send more standardized and templated documents that do not require considerable unique branding or modification, causing them to concentrate on the number of documents delivered rather than the >additional functionality provided by online signature solutions.
Enterprise-level or large-scale businesses
For enterprises with various stakeholders handling procedures that necessitate substantial content management-related practices, such as a major corporation having a sales team, legal staff, and human resources >department. This type of company usually needs an unlimited number of documents, a larger number of licensed team members, and extra features like custom branding and extra templates.
Sophisticated templates and reporting options are also available with online signature software. If you frequently issue the same contracts, you may upload the documents in the Templates dashboard. Just add a file (or use one you've previously sent as a template), fill in all of the signature and information sections, and save—nearly it's identical to sending out a single document and saves time. These are some of the most important tools that every company should have for smooth teamwork.
Because electronic signatures are so convenient, they allow for a considerably faster response. Rather than emailing a file to one party, having them a copy, sign, and upload it, then sending it to the next and redoing the process, everyone can sign off in moments with an online signature solution. In time-sensitive circumstances, this speedier turnaround gives large-scale organizations more flexibility.
Online signatures can also be used by people who don't belong to any of these categories. For instance, a home buyer may need to use it while purchasing a new property. The list goes on as to who can use these solutions, and this is because of their benefits. We'll explore these benefits in detail in the final section if you aren't yet convinced as to why we need online signatures.
- Electronically signing a document is virtually as quick as signing it on parchment, but it saves time in the processing of the paperwork. When documents do not have to be downloaded or printed and mailed as paper mail, a business can be administered more quickly. If necessary, the paper can be stored in a location where the authorized people can access it. Sending an online document to a receiver takes a few moments.
- Because resources like water and trees are preserved, the digital signature contributes significantly to environmental conservation. Did you know that a regular package of printer paper (500 sheets DIN A4, 2.3 kg) uses 7.5 kilograms of timber, 130 liters of fresh water, and 26.8-kilowatt-hours of energy to manufacture?
- The usage of online signatures makes it simple to have the signatory sign the document regardless of where he or she lives. Users of E-Sign can collaborate in a contract from a distance, saving time and resources. It serves as an appropriate entryway to personalized services for isolated towns and rural populations.
- With electronic signatures, the consumer can sign the deal as early as he or she agrees to buy your product or service, avoiding any hassles or waiting. Client satisfaction skyrockets since they don't have to travel to sign a document, ship signed documents back, or copy and scan a signed agreement to send through email. They may log on in milliseconds, from any gadget, online. Customers desire convenience, and they now prefer to complete contracts such as insurance, energy, and mobile phone plans from the comfort of their own homes.
- Some signing providers also offer document management and/or a digital record for signed papers, ensuring that they are not lost. In addition, searching for a document in digital format is generally easier than searching for a document in paper format. Organizing your paperwork becomes a lot easier when it's stored in a single, secure location on the cloud.
The convenience and compliance of today's e-signature systems are required in current legal processes. You can meet consumers' digital expectations by adopting online signature solutions. In fact, individuals have grown increasingly accustomed to the convenience and speed of digital transactions.
You won't have to go through any more time-consuming paperwork formalities with online signatures; everything is done on the internet in just a few seconds. This presents a modern and forward-thinking image of a brand that values its consumers' time. It's vital to understand that merely "adding" an electronic signature element to your sales cycle isn't enough. By optimizing the contracting process, whether online, virtually, or face to face, it is critical to reimagine the comprehensive customer journey and provide a tool that boosts your business's image.
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