The rise of the eSignature was all but an inevitability. The online world has come to represent a significant bulk of our human activities, in both our personal and professional lives. It’s inevitable, then, that actions that were once commonly found only in the physical world now have their digital equivalent.
And in many cases, that digital equivalent even comes to surpass its nondigital predecessor. Word processing has overtaken pen and paper, email has all but killed snail mail, and even books are facing stiff competition from e-readers. eSignatures have also been gaining real momentum over the years; according to MarketsandMarkets, the eSignature market is expected to grow from $1.2 billion in 2018 to $5.5 billion in 2023.
But what exactly are eSignatures, and what makes them different from digital signatures? Read on to find out.
The history of eSignatures
The history of eSignatures really begins with their historical predecessor, the humble wet signature. The first known example of a signature is that of a Spanish military leader and nobleman named El Cid, in 1069. But it wasn’t until 1677 that handwritten signatures gained prominence, and the English Parliament passed a law called the Statute of Frauds, which made it required for certain types of contracts to require a signature.
The advent of the digital signatures was just around the bend in 1869, when the New Hampshire Supreme Court permitted signatures via telegraph. The 1980s made signatures on faxed documents have legal standing. It wasn’t until 1996 that legislation started to be passed surrounding an emerging new technology, the eSignature.
That was the year the UN started to take preliminary steps, called UETA, to standardize eSignature legality around the world. Finally, 2000 brought about the ESIGN Act, signed into place by President Bill Clinton –– this codified the legality of eSignatures in the U.S. putting them on par with wet signatures.
Both UETA and the ESIGN Act held that:
- No contract would be invalidated on the sole basis that the signature is in electronic form.
- A contract cannot be denied legality simply because it was created electronically.
This was a groundbreaking moment in the history of eSignatures, and would mean there was no longer an inherent advantage to using traditional signatures. This set the stage for a surge in eSignature usage across a multitude of industries.
What’s the difference between electronic signatures and digital signatures?
While the terms electronic signature (eSignatures) and digital signature are often used interchangeably, there are meaningful differences in usage. Electronic signatures refer more generally to any type of signature that’s electronic as opposed to physical. Digital signatures are used when referring specifically to a type of electronic signature that uses encryption technology to ensure the security and authenticity of the signature.
Of course, many eSignatures are indeed digital signatures with all the security embedded. But when someone says “digital signature,” there is no doubt that they are referring specifically to the advanced, secure type of eSignature.
Here are some of the main differences between eSignatures and digital signatures.
Electronic signatures are:
- Used primarily for document verification
- Not necessarily authorized
- Equipped with fewer security features
- Include electronic ticks, verbal consent, or scanned signatures
- Not always verified
- Easy to implement and use
- Able to show signatory’s intention to sign the agreement
Digital signatures are:
- Able to fully secure a document
- Regulated and approved by certificate authorities
- Come with a wide number of security features
- Traditionally found in Microsoft or Adobe products such as PDF documents, though
- there are more advanced and flexible alternatives today
- Verifiable, with the highest degree of authenticity
- Capable of preventing tampering
It’s important to remember that many companies that offer electronic signature solutions, or eSignatures, are really referring to digital signatures. Looking into the solution’s specific offerings and capabilities is a more useful way of determining whether a particular solution would be a good fit, rather than focusing purely on semantic differences that not all companies use in precise ways.
What are the main use cases for eSignatures?
Thanks to the long-established legal validity of eSignatures, their use can be found in a wide range of different industries. Practically any industry that relies on contracts and agreements would find an eSignature solution helpful in streamlining operations and increasing efficiency.
Here are a couple of the most popular ways of using eSignatures:
- Healthcare: This is an industry that burdened with extraordinary amounts of paperwork, yet needs to be efficient in order to best serve patients. According to an NCBI report, a radiology department at one hospital that switched to eSignatures cut the time it takes to receive signatures for an abdominal exam from 11 days to three days. For chest examinations, the turnaround time for signature collection dropped from 10 days to five days. Whether it’s for specialists signing off referrals, patients providing consent to receive a treatment, or doctors agreeing to scripts for medicine, the healthcare system has endless uses for eSignatures.
- Law: Class action, mass tort, and personal injury lawsuits require a great deal of documentation, which inevitably requires signatures –– often of multiple parties. eSignatures allow law firms to co-view and sign off on contracts with their clients without the need to be in the same physical location. Use cases for law firms include notices, settlements, incident descriptions, NDAs, and much more.
- Finance: Banks and auto finance companies alike benefit tremendously from eSignature solutions. These institutions see constant streams of activities from their customers, including new account opening, credit card applications, personal loan applications and modifications, mortgage applications and modifications, and ACH payment authorization. eSignatures expedite the time it takes to acquire new customers, and ensure existing customers are efficiently serviced.
- Telcos: Average handling time (AHT) is a major concern for telcos, who rely on efficient call center agents to make sales and provide good service. eSignature solutions empower telcos to digitally send terms & conditions to customers, and have them sign in real time. This eliminates the need for agents to read time-consuming scripts or send over bulky paperwork. With a single click, customers can instantly acknowledge terms & conditions and the offer summary.
The bottom line: eSignatures are the gold standard
eSignatures have carried the same legal weight as wet signatures for over 20 years, and their usage has only become more and more widespread since then. There are plenty of use cases for eSignatures that span a wide variety of industries that are typically overburdened by paperwork. By adopting cutting-edge eSignature solutions, companies can close more deals, provide better customer service, and reduce turnaround times.