Electronic and digital signature: These are the differences

Electronic and digital signatures are becoming more and more important in times of increasing digitalization and are used in legal business communication in the B2B and B2C area, in public administration as well as between authorities and individuals. These terms are often used synonymously – but they do not mean the same thing. This article explains how the two types of signature differ in terms of definitions and functionalities as well as their legal validity.

The electronic signature

An electronic signature is a legal term and corresponds, under certain conditions, to a handwritten signature. In principle, this term refers to data linked to electronic information in order to identify the signer, verify the integrity of the signed document and, depending on the form of the signature, confirm it with a certificate.

The eIDAS Regulation (electronic IDentification, Authentication and trust Services) of the European Union – Regulation (EU) No. 910/2014 – creates a uniform European legal framework for electronic signatures and defines the following types which differ mainly in their legal validity.

Simple electronic signature

The simple electronic signature is the basic form of the electronic signature. It neither encrypts and thus keeps documents secret nor identifies the signatory. Nor does it guarantee protection against changes of the signed document.

The sender of an e-mail or a scanned signature in a document is already considered a simple electronic signature. The probative value in legal disputes is low. In practice, this signature is used for internal company communication and for documents with low legal risks such as documentation or minutes.

Advanced electronic signature

In contrast to the simple one, stricter regulations apply to the advanced electronic signature. In this form, the signature must be unequivocally linked to a specific person. In addition, it must be possible to detect any subsequent change of the data.

The probative value is greater than that of the simple signature, but it is the responsibility of the signatory to prove that the signature both originates from him or her and was generated in accordance with the required security measures. The technical basis for the advanced electronic signature is a unique and confidential software key.

Qualified electronic signature

It is the only form of electronic signature that fully corresponds (with a few exceptions in the notarial environment) in its legal effect to the handwritten signature. As such, it offers the greatest probative value in legal disputes. The requirements are correspondingly high: According to the eIDAS Regulation the qualified electronic signature is "an advanced electronic signature that is created by a qualified electronic signature creation device, and which is based on a qualified certificate for electronic signatures". Anyone wishing to use this type of signature must therefore register with a so-called trust center or certification service provider, which guarantees the conformity of a public, asymmetrical signature verification key and the identity of the signature key holder.

The digital signature

In contrast to the electronic signature, the digital signature per se has no legal character, but represents an extension of the qualified electronic signature, which offers additional security through encryption. On the one hand, the data of a document are encrypted and kept secret and protected against manipulation, and on the other hand the signing person is authenticated beyond doubt. The greatest possible probative value is currently attached to electronic signatures based on digital signatures, as these guarantee the authenticity and integrity of the signed data.

Advantages of digital signatures

In addition to the high legal validity and the guarantee that a document has not been manipulated, companies benefit from a number of other advantages after implementing digital signatures. A Forrester study from the financial sector, for example, shows that the error rate for contracts was reduced by 80 percent and the processing time for forms by 30 minutes. Besides, digital signatures can increase the efficiency of contracts with new customers and credit checks by up to 85 percent.

We take into account the increasing importance of electronic and digital signatures and are working on new features for Fabasoft Contracts and Fabasoft Approve. You will soon read more about this in the description of the Fabasoft Cloud 2020 June Release.