Digital Signatures in E-commerce: Security & Benefits

What is a digital signature, and how does it work in e-commerce?

 A digital signature securely associates the signer with a document in a recorded transaction. To provide high levels of security, digital signatures use a standard, accepted format called Public Key Infrastructure (PKI). There are three types of digital signatures: advanced electronic signatures, qualified electronic signatures, and simple electronic signatures.

Digital signatures help ensure the security of online transactions in e-commerce, building trust between buyers and sellers. They can also provide evidence if you need to validate the authenticity of a signature during an e-commerce transaction. 

How do digital signatures improve the customer experience in e-commerce?

Using a digital signature helps ensure that electronic documents haven't been tampered with, making online deals safer. Digital signatures offer a quick and easy way to verify the identities of those involved in e-commerce transactions in both a business-to-business and business-to-consumer environment. They can make processes requiring the buyer to sign a contract smoother and more efficient. Digital signatures are almost impossible to forge, and most e-commerce transactions will involve data encryption to keep the data exchanged between a customer and buyer secure.

If you use an approved provider, e-signature software often offers globally recognised enhanced security throughout the transaction. The software also provides timestamping, which gives the date and time a digital signature occurred. This extra layer of security ensures that documents aren’t tampered with, and it is clear that neither buyer or seller can deny when the transaction was made. In addition, providing the option of a digital signature can help organisations go paperless and save the money that was previously spent on physical resources. It can also help to save time for key personnel and reduce the office space used to manage and transport documents.

What are the common security threats in e-commerce?

Several threats to e-commerce security are at play in today’s digital world. These include:

• Financial fraud occurs when hackers or fraudsters make purchases using stolen credit card information or data. E-commerce can appeal to these fraudsters because there is no physical contact during the transaction. This can happen if a card hasn’t been reported lost or stolen.

• Hacking and Phishing—Hackers may send emails to your customers disguised as your organisation and ask for a specific action to be taken. Hackers often send messages or emails pretending to be from your organisation with the goal of obtaining private information. When a fraudster emails a particular person, employees can be targeted by ‘spear phishing’. They pose as someone else within the company, usually someone important or in a position of trust, and ask for information like login IDs and passwords.

• Malware—malicious programs such as spyware, viruses, trojan horses, and ransomware can be installed on your computer or customers’ computers. They can often be disguised within a legitimate-looking email. If the attachment is opened, ransomware can infect your computer.

• Data breaches - a security incident that occurs when data is accessed without authorisation. Criminals can use the data obtained in a data breach fraudulently.

How do digital signatures prevent fraud in e-commerce transactions?

There are several ways in which using a digital signature can help prevent fraud in e-commerce transactions:

• Data transferred using digital signature software is encrypted, and digital signatures use a standard, accepted format called Public Key Infrastructure (PKI). This format contains a private key that is not shared and is unique to and used only by the signer to sign documents electronically. Using PKI methodology, digital signatures utilise international technology that helps prevent forgery or changes to the document after signing.

• Where even higher security standards are needed for high-value transactions, a qualified or advanced electronic signature can be used. An advanced electronic signature asks the user to complete additional authentication steps. The signer may be asked to produce and use a valid, government-issued document to confirm their identity, pass various biometric detection checks, and use a unique access code after the signing process. Qualified Electronic Signatures offer the highest level of trust through face-to-face, or equivalent, ID verification. Customers are asked to electronically identify themselves when prompted to verify their ID during the signing process.

• Digital signatures authenticate a signer's identity, providing trust for both buyer and seller when the e-commerce transaction has taken place. It is also harder for a hacker or fraudster to impersonate anyone else.

• A digital signature provides a clear audit trail of any changes that have been made during the transaction. It also reduces the need for physical documents to be transported or stored.

What role do certificate authorities play in the use of digital signatures in e-commerce?

Certificate Authorities (CAs) play an essential role in the use of digital signatures in e-commerce as they help verify the identity of both individuals and organisations. They issue certificates to establish trust in online transactions and bind the identity of an individual or organisation to a public key. A certificate authority is a type of Trust Service Provider, a third-party organisation that has been widely accepted as reliable for ensuring key security that can provide the necessary digital certificates. Docusign is a trusted CA and also has a list of Accepted Trust Service Providers it supports.

How can e-commerce businesses implement and integrate digital signatures into their processes?

E-commerce businesses that want to implement digital signatures must first select digital signature software. Your software may need to integrate with your existing e-commerce platform for ease. For example, Docusign integrates directly with Shopify and can be easily integrated using Zapier. You can also integrate WooCommerce and Docusign using Zapier. Contact the Docusign Sales team for help on integrating digital signatures into your e-commerce business.