e Sign or Digital Signature Solution: For Digitally Signing Documents
With the ongoing COVID-19 pandemic, concepts like social distancing, digital transformation have surfaced. The majority of the businesses are shifting from the conventional method to digitalization. No physical contact, paperless transactions are now becoming a reality and people need to abide by them. Amidst such occurrences, a new notion of digital signature solution or eSign has been prominently recognised. Some businesses have already implemented Electronic Signature or e Sign services. There are various firms providing digital signature certificate services as well.
A wet signature is legal consent given by a person thus, assumes a lot of significance. The KYC based eSign is equivalent to this wet signature. Like the wet signature, it also ensures non-repudiation and legally binding.
What is e Sign?
eSign is an abbreviation for Electronic Signature. As technology evolves, new methods of signature are evolving. The Legal definition for Esign: “The term ‘electronic signature’ means an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.” — Electronic Signatures in Global and National Commerce Act (ESIGN).
In layman’s words, digital signature or e Sign services is a way of digitally signing the document. It is a paperless method by which a person or business entity can enter into an electronic contract. The Information Technology Act, 2000 introduced the concept of Electronic Signature but no one paid any major heed to it until now. In India, eSign will soon be changing the face of online transactions. Though an alternative for wet signatures, we need certain documents in place to avail of this service. For digitally signing a document, we need to possess a Digital Signature Certificate from the Central Authorities of the country.
A notable feature of eSign is its execution anywhere, anytime without much hassle. It uses digital signature technology to sign a said document. eSign is legally binding and highly regulated. And like the wet signatures, it is now held as a valid identity of the proxies.
What is a Digital Signature?
Digital Signature is a mathematical sequence used to authenticate and verify the document or a message. It is an algorithm that the receiver of the document can use. The person can check and verify if the document or message received by him/her is not modified and is in its original format. It makes use of Public Key Infrastructure (PKI) which provides both entities with the highest level of security. PKI is an universal accepted format that allows inter-country transactions. It helps to minimize the risk of false identity.
The interchangeable use of a digital signature and an electronic signature is common. This makes it difficult to understand their true meaning as they are two different fundamental concepts. An eSign or electronic signature is the image or representation of the original wet signature in different formats or a combination of them. It can be the original signature, DSC signer certificate or biometric signature. A digital signature is a mechanism behind e Sign. It is one of the technology to authenticate document validity. It is also known as a digital certificate which is the cryptography behind an electronic signature.
Both, digital signature and electronic signature have one fact in common. They allow you to sign the documents and authenticate the signer but differ on various bases. They differ in technical implementation, legal acceptance, geographical use and purpose. The digital technology used for eSign significantly varies between countries. The United States, Canada, United Kingdom, Australia follow open, technology-neutral laws. Whereas countries in South America, Europe and Asia follow tiered e Sign models. In the tiered e Sign model, local standards define the digital signature technology.
What is eSign Aadhaar?
We know that Aadhaar has weighing importance for KYC verification and earlier, it was an irksome task. But the eSign technology makes it more simple and nimble. It facilitates the digitally signing of the document by an Aadhaar holder using the Aadhaar EKYC services. It is an integrated service that issues a Digital Signature Certificate (DSC signer service) for e-signing the document. A person must have an Aadhaar card for availing e Sign services. If you are a registered Aadhaar user, you can automatically use the e Sign services with no prior paperwork.
For instance, if two parties or entities want to enter an agreement. If they have a 12 digital Aadhaar number and registered Aadhaar mobile number, then it is possible for them to sign the document without physical presence. It is an initiative by the Indian Government to allow a person having an Aadhaar to instantaneously sign & verify a document anywhere, anytime. Hence, saving a significant amount of time and costs. Under the provisions of The Information Technology Act, eSign or Electronic Signature assumes equal value as a wet sign. It is a recognized form of a signature that holds legal validity.
In India, every individual who has an Aadhaar card can do a digital signature using Aadhaar eSign and this is equivalent to a wet signature. There are various providers of digital signature services with many variants of eSign.
The working of e Sign Services
The digital signature process may seem simple to the end consumer but the mechanism behind is more sophisticated as it is a highly regulated service. The Application Service Provider sets up the framework of the system and creates an application interface when a user accesses the e Sign services. The user can access the services of the ESP (eSign Service Provider) entity using the API. ESP is a government-approved entity providing e Sign services. Once the user and ESP connct, the user provides authentication of their identity. For this, the users access the data saved on their Aadhaar profile using fingerprints or an OTP verification code sent on the registered Aadhaar mobile number/registered Email ID.
Soon as the information provided by the user matches the KYC database of the Indian government; a certified, government-regulated authority issues a temporary Digital Signature Certificate. This generates a PKI and creates an audit trail with the authentication response. The ASP will then receive the signature from the ESP in the form of an attachment to the document. As the user makes the signature, the key gets destroyed automatically after one time of use. There are many firms that provide digital signature certificate services. But the institution needs to choose the one which is compliant with all the mandates.
Benefits of E Signature
Interwoven into the globalised world, eSign is a welcome step for revolution. Many countries are implementing it due to its noteworthy benefits:
- E Sign has brought big effects by opening up more global trade opportunities.
- There is no need for physical presence for signing the document is no more required.
- It saves a lot of productive time due to the instant signing of documents.
- eSign eliminates the cost of enormous paperwork, printing, scanning and travelling.
- It produces a legal and valid document managed by licensed Certifying Authorities ensuring that there is no identity theft.
In India, there are some exceptions where e Sign is not applicable. Here are the classes of documents where the application of e Sign is not possible:
A negotiable instrument as defined in section 13 of the Negotiable Instruments Act, 1881
- A power-of-attorney as defined in section 1A of the Powers-of-Attorney Act, 1882
- A trust as defined in section 3 of the Indian Trusts Act, 1882
- A will as defined in clause (h) of section 2 of the Indian Succession Act, 1925 including any other testamentary disposition by whatever name called
- Any contract for the sale or conveyance of immovable property or any interest in such property
- Any such class of documents or transactions as may be notified by the Central Government in the Official Gazette
By now, most of the countries have adopted digital signature technology and are improving their compliance regulations. The country and industry-specific regulations are evolving, a prominent example is a regulation recently adopted by the European Union known as Electronic Identification and Trust Services (eIDAS) regulation.