In today’s digital world, the signing process for a paper document is time-consuming, wasteful, and, quite frankly, unnecessary. So, it makes sense that with the rise in popularity of the electronic document, electronic signatures have become the new standard for brick-and-mortar and remote businesses alike. They’re more convenient for the signer, paperless, and perfectly suited for any business that is conducted remotely.

You might have also heard about digital signatures, too. Which begs the question, “what’s the difference between electronic and digital signatures?”

Good question! While the two share many similarities, they are in fact, two very different things.

Let’s dive deeper into the unique aspects of both types of signatures, where they came from, and why they matter.

Electronic signatures vs digital signatures

eSignature solutions

Also written as “e-signature” or “eSignature”, an electronic signature represents verified intent to sign a document. They can be anything from a verbal authorization, an electronically signed authorization, or just checking a box. The most traditional form of authorization is simply typing or signing your name on a document, but you can also use an electronic sound, symbol, or process that indicates your intent to sign, like entering in a numbered code.

Technically, the first electronic signatures were sent via the pantelegraph. Developed in the mid-19th century, it was mostly used by bankers to transmit and receive important, signed documents. It scanned, reproduced, and transmitted images over telegraph lines. Think of it as an early fax machine.

While the concept of an electronic signature has been around for centuries, the electronic form has advanced and become more widely accepted. Now, digital signing forms is easier and better suited to the changing landscape of the world than ever. With the unprecedented pandemic of COVID-19 that has forced many businesses to quickly adapt to remote life, signature software is one tool that every industry must now rely upon.

Not only does it keep deals in motion, but PandaDoc’s type of electronic signature enables remote organizations to streamline sales, onboarding, training, and much more.

Digital signature technology

A digital signature contains an algorithm that encrypts the signature to generate a unique digital certificate. It’s a type of signature that encrypts a document with invisible digital codes that make tampering and duplication practically impossible for hackers.

The very first algorithm for a digital signature was invented in 1976. In its early iteration, it, unfortunately, contained workarounds for anyone determined to forge or tamper with the document. It was not fit to prevent outside forgery until the security requirements were defined in 1988. Now, there are electronic signature laws that protect the signer’s identity and support the fact that digital signatures are the most secure way to sign documents.

But, are they legal?

Yup!

Both types of digital signatures are legally binding forms of accepting signatures. Electronic signatures are legally enforceable in the United States, Canada, U.K., Australia, the European Union, and dozens of other countries. In most cases, electronic signatures are no different than handwritten ones — the primary difference being that signing a document electronically is more convenient than by hand.

PandaDoc’s eSignature solution is compliant with the U.S. ESIGN Act (Electronic Signatures in Global and National Commerce Act), the UETA Act (Uniform Electronic Transactions Act), and the European EC/1999/93 Directive, ensuring their legality. Our software also generates a unique barcode that emphasizes its certificate authority.

However, there still are some cases where handwritten signatures are required. In U.S. tax forms, voter registrations, and new driver’s license applications are all instances in which a handwritten signature is still required for legitimacy and legality. However, given the current state of the world, we believe it’s only a matter of time before these institutions begin to accept electronic signatures.

Final thoughts

Now you know the key difference between digital signatures and electronic signature types, what can you do with this information?

You can create meaningful, legally binding, digital documents that are quicker and easier for you, and your customers, to sign!

Originally published August 30, 2016, updated May 15, 2020