Environmental concerns, high operating costs, and growth of mobile technology are forcing more and more businesses to go the paperless way. However, when it comes to signing documents there is the problem of faxing them to the signer, taking printouts, signing them and sending them back, all of which tends to defeat the very purpose of going paperless. That’s where digital signatures come in. A digital signature is a highly secure electronic signature that eliminates the need for traditional paper-based signing. Instead a digital or electronic footprint is created to ensure validity and authenticity of the signer.
What are Digital Signatures
A digital signature is created using a mathematical algorithm and has the effect of ensuring the validity, non-repudiation, and integrity of the signer as well as the document. That simply means that the recipient of the digitally signed document can expect the document to be created by a known person who cannot later on deny having signed the document. It also ensures that the document has in no way been tampered with or forged.
Digital Signatures versus Electronic Signatures
The terms digital signatures and electronic signatures are often used interchangeably. While the two terms are common in many aspects there is one significant difference between the two that you should take note of. A digital signature is highly secure and ensures the validity of the signer. If changes are made to an electronic document after the signature has been placed, the signature gets invalidated, thereby ensuring that the document is tamper and forgery proof.
An electronic signature on the other hand can be a simple typed name on an electronic document or a digitized image of a handwritten signature. It does not offer the security or authenticity that a digital signature does. It can be easily overwritten by typing another name on the document. While digital signatures cannot be copied or tampered with, electronic signatures can be easily manipulated and that’s why electronic signatures are often not legally binding unless verified and validated by a proprietary software.
Why Digital Signatures are the Way Forward
It is estimated that every year, companies spend over $3000 on paper based documentation. Companies that adopt digital signature solutions not only save on costs, they can also reduce the time involved in scanning, printing, faxing, archiving and other business processes, thereby improving efficiency within the organization. There is also the added benefit of protecting the environment.
From simple service documents to complex legal ones, electronic digital signatures are paving the way forward and are starting to become standard operational procedure. Today, there are a variety of cloud based services that offer electronic signature software services for individual, small, medium and enterprise level businesses at flexible prices.
How Digital Signatures Work
Lets assume that you have received a document from your insurance provider and now need to digitally sign and send it back to them. Here’s what you need to do.
1. Obtain Keys
You need to first obtain a private and public key. The private key is used by the signer while the public key is given to the company who needs to validate the digital signature.
2. Sign the Document
Next the document is opened up and the signature placed on the document by clicking the Sign button, which will usually be on the software’s toolbar. A unique digital footprint of the document (also called hash or message digest) is now created using a mathematical algo such as SHA-1. This is unique because if there is even the slightest deviation in the document, it will create a different digital footprint. The signature created by a combination of the public key and the hash result is then appended to the document.
3. Validate the Signature
The document is then sent to the company who will use the public key to authenticate the signature by clicking on the Validate Signature option on the software’s toolbar. The digital signature is decrypted and the original document is compared with the one sent by you to ensure that the document hasn’t been tampered with.
The signer will be verified using Certificates from trusted third parties, called Certificate Authorities (CA).
Legality of Digital Signatures
Several laws have been passed in America ESIGN Act,and Europe which makes contracts signed using digital signatures valid and legally binding just as a paper based contract.
Although digital or electronic signatures have a short shelf life, and may require senders and signers to buy propriety software and digital certificates, the overall benefits of using electronic signatures in businesses far outweighs its negatives. The future of business both big and small rests in economy of costs and efficiency of services and digital signatures certainly lead the way in empowering them.