• Updated

Digital Signatures vs. Electronic Signatures: What You Need to Know

They sound the same, but they are legally very different. Understand the distinction between e-signatures and digital signatures for your contracts.

Comparison of a simple stylus signature vs a cryptographic digital certificate

Digital Signatures vs. Electronic Signatures: What You Need to Know

In the world of online contracts, the terms “Electronic Signature” and “Digital Signature” are often used interchangeably. But technically and legally, they are worlds apart.

Confusing the two can lead to compliance failures or unenforceable contracts. Here is the definitive breakdown.

1. Electronic Signature (eSignature)

Definition: An electronic sound, symbol, or process attached to a contract, adopted by a person with the intent to sign.

Examples:

  • Typing your name in a box.
  • Checking a “I Agree” checkbox.
  • Drawing a squiggle with your mouse.

Security: Low. It proves intent, but it doesn’t strongly prove identity or integrity. It is hard to prove who clicked the box or if the document changed afterwards.

Use Case: Standard business agreements, NDAs, consumer terms of service.

2. Digital Signature

Definition: A specific type of electronic signature that uses Public Key Infrastructure (PKI) technology to secure the document.

How it Works:

  1. The signer has a Digital Certificate (a digital ID) issued by a trusted Certificate Authority (CA).
  2. A cryptographic hash of the document is created.
  3. The hash is encrypted with the signer’s private key.

Security: High.

  • Identity: The certificate proves who signed it.
  • Integrity: If the document is altered by even one byte after signing, the signature breaks and shows as “Invalid.”

Use Case: Government filings, regulated industries (pharma, finance), cross-border legal contracts (eIDAS).

3. The Visual Difference

To the user, they might look the same (a visual representation of a signature on a page).

But if you open the PDF in Adobe Acrobat:

  • eSignature: Just looks like an image.
  • Digital Signature: A “Signatures” panel appears, showing a green checkmark: “Signed by John Doe. Document has not been modified since this signature was applied.”

4. Which One Do You Need?

  • Speed & Ease: Use Electronic Signatures. They are frictionless and legally binding for 90% of US business transactions (ESIGN Act).
  • Trust & Compliance: Use Digital Signatures. If you need to prove in court that a document hasn’t been tampered with, or if you are operating in the EU (where “Qualified Electronic Signatures” are the gold standard), you need the crypto backing.

5. Implementing in Automation

When generating contracts automatically:

  • You can place eSignature tags (e.g., {{Sign_Here}}) for platforms like DocuSign to recognize.
  • You can apply a Digital Signature (sealing the document) using your organization’s certificate immediately after generation to prove the document originated from your system and hasn’t been tampered with.

Conclusion

Think of an Electronic Signature as a handshake, and a Digital Signature as a notarized seal. Both seal the deal, but one carries much more weight.

Secure your automated contracts. MergeCanvas supports digital certification of generated PDFs, adding a layer of trust to your automated workflows.