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eSignatures vs. Digital Signatures: Understanding the Difference
Published: December 6, 2021

If your business is still using the wet ink technique to get important documents signed, then you’re missing out on the efficiency and cost savings that taking signatures digital could have for your business.

Electronic signatures (usually denoted as eSignatures for short) and digital signatures are two popular categories of signatures that are based on a paperless approach. Although they may sound similar and are often used interchangeably, electronic and digital signatures are different in many ways. 

In this guide, we explore the major differences between digital and eSignatures, what sets them apart, and how to use each one of them. Let’s get started.

 

What is an eSignature and How Does It Work?

An eSignature is an electronic symbol, sound, or process associated with a record or contract that the interested party intends to sign. The main benefit of eSignatures is that it signifies the signer’s intent to sign the document. As long as the association with the person is demonstrated and intent to sign is also shown, then it’s legally accepted and binding. This can be done in the audit trail and by using an eSignature software to authenticate and determine the signatory details including the company ID, email address, password protection, and a secure PIN. The Electronic Signatures in Global and National Commerce Act (E-Sign Act) ensures that eSignatures are legally binding.

 

What is a Digital Signature and How Does It Work?

A digital signature, also referred to as an advanced eSignature, offers increased document security, trustworthiness, and signer authenticity. It uses encryption and decryption-based technologies to help validate the authenticity of the signer. It also requires the presence of an official digital certificate to validate the signature and the identity of the signer – this can be verified using a public key created upon signing. This creates an audit trail where users can view all the details on each step taken during the signing of the document. 

The digital signature process also embeds a set of requirements known as Public Key Infrastructure (PKI) into the signing process to provide an extra layer of security and universal acceptance. 

 

Digital Signature Vs Electronic Signature: The Difference at a Glance

The major difference between an eSignature and a digital signature leans more towards the method of identifying the businesses and signers. Digital signatures use certificate-based identification methods like PKI during the signing process to identify both the party requesting for a signature and the party proving one. eSignatures also use standard methods including email, employee Identity, or multi-factor authentication to authenticate a signer’s identity. 

In essence, this means that digital signatures are a more secure way to get documents signed legally and guarantee signee authenticity.

Other identifiable differences between an eSignature and a digital signature include:

Electronic Signature

  • It’s a method for entering into a legal agreement in a digital environment – there must be the intention to sign a document or agreement
  • It can be an image, symbol, or process attached to a document or message to recognize the signee identity and give consent to it
  • Used to verify document authenticity
  • The authentication methods used are not defined and use the signer’s phone PIN, email, etc.
  • Authorized by document creator, specific vendors, or the parties involved
  • Cannot be verified
  • Vulnerable to tampering
  • Major types of  eSignatures include verbal, scanned signatures, and electronic ticks
  • Stores audit trails to help in validation of signed documents

Digital Signature

  • A secured signature that works similarly to eSignatures, but relies on public key infrastructure (PKI) to secure documents
  • It’s visualized as an electronic fingerprint and used to encrypt and identify a person’s identity
  • Used to secure a document
  • Involves certificate-based digital ID authentication techniques
  • Regulated and authorized by the government or certification authorities
  • It can be verified by trusted certificate authorities or service providers
  • Cannot be tampered with due to their high-security features and verification measures
  • Based on Microsoft and Adobe pdf
  • Utilize encryption to verify the authenticity of signed documents

 

When to Use eSignatures Vs Digital Signature

Certain situations call for an eSignature vs digital signature. These signatures differ in where they’re used depending on your business needs.

 

When to Use E-Signatures

An eSignature is used to legally verify documents and identify the source of the document. Some examples include, a scanned image of the person’s ink signature, digital certificates issued by a certificate authority, a name typed at the end of a document or email, a PIN entered into a bank’s ATM, and a signature made through swiping a finger on an electronic device (tablet, phone, etc.)

In HR, for instance,  eSignatures are used in onboarding for tax forms, new-hire paperwork, and I-9s, recruitment for applications or reference consents, payroll for timekeeping records, and performance management for disciplinary actions and appraisals.

 

When to Use Digital Signatures

Digital signatures are the easiest to validate and most common approach used by businesses. They are regularly used when you need more security and compliance with a document to keep it safe from any kind of tampering. Digital signers are automatically given a certificate from a certificate authority (CA), and once the user signs the document, they are assigned a PKI binding their identity to the document. Importantly for organizations, they are legally binding and secure, UETA, SOC2, and HIPAA compliant as their paper equivalent in the US, and beyond. The US eSign Act regulation means that your business can use digital signatures and be confident the information is legal and secure. 

For example, in sales, digital signatures are used to sign contracts and sales agreements for authentication and assurance that the documents are secured. In HR, digital signatures are used in employee or vendor onboarding including acknowledgment of statements and tax forms.

 

Benefits of Using Non-Paper Based Signatures

Opting for non-paper-based signatures has multiple positive impacts on how organizations process contracts. Here are some of the main benefits of paperless signatures.

 

Simple and Intuitive

Among the main benefits of a digital signature and eSignature is their simplicity and ease of use. They provide a much quicker way of signing without printing a single paper. Once the signer has acquired their digital signature, it becomes easy to use on any document and even send it across securely. The recipient gets to sign the sent document and the process is over. It’s that easy.

 

Signer Authenticity

As organizations move away from paper documents that involve ink signatures and authenticity stamps, paperless signatures can provide added assurance and authenticity of the document. It shows the recipient that the document was in fact signed by the person who claimed to sign it. When adding the digital signature to the document, the identity of the signer is verified and the signed document is accompanied by a signed certificate to certify its authenticity.

 

Quick Turnaround

Among the primary factors that can cause contract delays is time lost coordinating signatures especially during negotiations, approval of updates or amendments, and so on. Using paperless signatures to communicate, review and sign contracts not only makes the critical information available to all parties but also allows a faster turnaround time for the process.

Instead of involving multiple players through every step, a digital or eSignature authentication happens at the click of a button. As a result, organizations have the necessary agility and ability to take advantage of opportunities that arise.

 

Reduced Operational Costs

With all the stressful processes that involve manual printing, signing, and scanning going out of the way, a paperless signature can help save money. Digitalized signatures reduce expenses associated with paper, shipping costs, copier wear, and tear, packaging materials, and more. Over time, this translates into more income for the business and increases ROI in the long run.

 

Security and Confidentiality for Data and Documents

Paper contracts and other traditional documents are at a high risk of getting damaged, failure to meet compliance standards, or incurring other risks. Electronic vs digital signatures contain an authentic signature of the sender and also allow you to conveniently access this information to know who signed the document, when it was signed, and where. Such advanced features of paperless signatures enforce stronger security to confidential information.

 

Enhanced Process Efficiency and Optimization

In addition to the time and material costs saved with non-paper-based signatures, an organization may experience increased efficiency when dealing with contract processes. Reducing the printing, faxing, and locating lost documents linked to paper contracts frees up a substantial amount of time allowing teams to concentrate on more valuable tasks that contribute to the business bottom line.

 

Finding an eSignature Solution for Your Business

Both digital signatures and eSignatures have their own relevance in the digitally growing world. It comes down to the specific purpose that you want to serve with each one of them. When selecting an eSignature or digital signature solution, it’s important to understand whether a simple eSignature is enough, or if a more secure digital signature is required.

OnTask offers a flexible workflow automation solution for legally binding electronic and digital signatures that can be used in a couple of contract processes including employee onboarding, school permissions slips, benefits selection, liability waivers, and more.

So, are you ready to automate your workflows and access simple, secure, fast, cost-effective, and compliant signature options? Schedule a customized demo with our team to get started today.