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Strange as it seems, all three were once believed to be true. Today, all three are most definitely myths, and the last one may surprise you.
Many small business owners believe ink signatures — commonly referred to as “wet signatures” — are the only option when it comes to legally binding documents. However, electronic and digital signatures have been acceptable since 2000, when the Electronic Signatures in Global and National Commerce Act (ESIGN) designated that electronic signatures had the same legal standing as handwritten ones.
ESIGN has been in effect for 17 years, so why are some folks so adamant about written signatures being the only true signature? Some habits die hard, and that’s okay; if you prefer written signatures, keep on scribbling. However, it is important to know that digital and electronic signatures are 100% legal and secure, and they just happen to be easier to manage than print signatures.
This is where it gets a little confusing, so let’s keep it simple. Under the broad category of electronic signatures, you’ll find the more specialized subcategory of digital signatures for documents. Both electronic and digital signatures allow you to authenticate yourself as the signer, and both are legally acceptable. Let’s look at the differences:
Electronic signature. It’s basically the act of authenticating, acknowledging or adopting an electronic transaction. Common examples are personal identification numbers used to access accounts (think ATMs), checking “agree” or “disagree” to accept terms on an electronic document, typing a name on an electronic document (emails, letters, forms, etc.), a scanned image of your handwritten signature placed into a document, and signing your name on a tablet to conclude a transaction. Each situation represents your acknowledgment and is legally binding.
Digital signature. This takes the electronic signature process a step further by including an embedded “certificate of authority.” When a digital signature is used, the certificate indicates who the person is, and it includes a date-and-time stamp to assure authenticity. Digital signatures usually require software programs (like Adobe Acrobat) or e-sign services (like DocuSign) to create a certificate that is specific to you.
If you’re not using digital signatures, it may be due to the intimidation factor. Your first thought may be “That sounds pretty technical and complicated, and I don’t have time for all of that.” Fair enough, but there are advantages to moving away from printing documents and applying your John Hancock in ink:
As technology continues to advance, more and more businesses will move toward digital signature acceptance. However, as long as your business partners agree on a preferred process, both wet signatures and electronic signatures are acceptable and legally binding.