Importance of Digital Signature in eCommerce Industry

Importance of Digital Signature in eCommerce Industry-feature image

In this digital era, we all have established our identities online. But what about its authentication? Here comes digital signature in eCommerce or any industry into play.

Digital signatures primarily focus on providing top-notch security for legal contracts, online transactions, banking services, etc. It enhances customer experience and increases the efficiency of routine tasks.

Today, in this article, we’ll be discussing about the role of digital signature in eCommerce, its importance, and its advantages.

Let’s begin!

What Is Digital Signature in eCommerce?

As the name suggests, a digital signature is an advanced alternative of electronic signatures used for signing documents. It uses cryptographic technology to ensure the authenticity of documents and digital communication happening over the internet.

importance of digital signature

Digital signature uses a unique mathematical technique that verifies if the document has been forged or modified in any manner.

Digital signature in eCommerce ensures the security of online transactions and helps build the trust of buyers. It helps in validating the authenticity of a buyer. Digital signature in eCommerce provides the evidence to validate any transaction, digital message, or document.

How Does the Digital Signature Work in eCommerce Space?

Digital signatures provide complete security during online transactions, which is a major part of the eCommerce industry. This process takes place in three stages:

The first stage is called the Key Generation Algorithm, where a private key is generated using an advanced mathematical algorithm.

In the next stage, after generating a private key, the document that is to be signed is also generated. This stage includes the Signing Algorithm. Although, the document cannot be signed until the signer’s private key is verified.

The verification happens in the third and the final stage, which utilizes Verification Algorithm. In this stage, the system verifies the authenticity of the private key and the message. In this process, the system generally generates two keys – a private and a public key. This means that for every private key, a public key is created.

Now, the process of authentication is done to determine whether the private and public keys match or not. Once both the keys match, the signer can sign the document.

Especially in the e-commerce industry, where transactions happen between anonymous identities, the security of digital signatures ensures that only verified transactions take place.

Suggested Read: How to Create Digital Signature Electronically in Few Easy Steps

Importance of Digital Signature in eCommerce

Undoubtedly, the digital space has connected us to a lot of people and opened doors to unforeseen opportunities. But it has also exposed us to cyber fraud.

In any mode of eCommerce business, whether B2B, B2C, C2B, or C2C, there are chances of cyber frauds such as identity theft, payment fraud, etc. Digital Signature in eCommerce ensures that the parties involved in the transaction are authorized to complete it and are not cybercriminals.

For instance, a customer can steal someone’s identity to buy a product online. Here, an eCommerce digital signature can save the seller from payment fraud.

According to Forbes, in 2019, a rising trend called New Accounts Fraud, a type of payment fraud in eCommerce scams has been increased by 27.8%. Also, identity theft has been recorded as the second most common eCommerce scam with a large number of 650,572 cases.

Therefore, eSignature in eCommerce has become imperative to safeguard the authenticity and confidentiality of online transactions. Digital signature in eCommerce ensures that the financial transaction is safe for the buyer as well as the seller.

Advantages of Digital Signature in eCommerce

digital signature

However, the fears related to digital signing in eCommerce still persist. Let’s try to overcome those by understanding the different advantages of electronic signature in eCommerce.

  • Secured Data Sharing: The security of digital signing in eCommerce can be verified by multiple methods like public key infrastructure, hash functions, cryptography, and encryption. All these methods create a strong security system for eSignature in eCommerce. For example, a seller can share sensitive information about the product or a contract with the buyer by securing it with a digital signature.

  • Generates Workflow Efficiency: In the case of physical signatures, documents travel from one destination to the other. This involves a lot of additional resources like a courier service to get the document signed. But with the eCommerce digital signature, the wastage of time and possibilities of human errors can be eliminated. The buyer and seller can exchange documents over the internet, irrespective of their physical location just with a stable internet connection.

  • Elevates User Experience: This is an underlying advantage of electronic signature in eCommerce which contributes to the enhanced user experience. Processes related to signing documents and making payments have become convenient, faster, and secure. The entire process is hassle-free and takes only a few minutes.

  • Secured Online Transactions: Digital Signature in eCommerce uses multiple authentication methods which ensure a high level of security. It makes sure that there is no digital payment fraud and the anonymous identity is a real and authorized person. This helps in gaining customers’ trust and assuring them of a secure and safe transaction.

  • Simplifies B2B Contracts: Electronic signature in eCommerce can also be used in financial transactions happening between companies or organizations. The contract in the B2B eCommerce model is detailed and technical, which requires even the legal teams to sit on board. This process could take days if done physically, especially if the organizations are operating from different cities or countries. So, in this case, digital documents authenticated by eSignatures can save time and travel and reduce complexities.

  • Legal Validation: Physical signatures can be very easily challenged in court for any reason. But digital signatures are known for their authenticity and accepted by the law. Digital signatures can be easily tracked with timestamps and presented in case of arguments.

Suggested Read: Why You Need eSignature Software for Your Company?

Role of Digital Signature Software in eCommerce

As e-commerce deals with buying and selling of products online, all the records of these transactions are in the form of digital documents. A digital signature software enables businesses to speed up their processes as they can share invoices, receipts, and other transaction related documents with customers directly. You can use customizable templates for the standard documents and save time.

Most digital signature software solutions support bulk actions like deletion and sharing. You don’t have to email these documents separately on a one-by-one basis. Also, digital signatures ensure legal validity of these documents. So, you do not have to spend money on printing hard copies of these documents.

Also, the digital signatures created for the documents using digital signature software come with a tamper evident seal. Every change in activity log is tracked and time stamped so that no alterations can be made without your knowledge. By ensuring data security and privacy, e-commerce businesses can also avoid regulatory penalties.

In short,

Digital signatures in eCommerce are beneficial for both the parties, the buyer and the seller. It gives confidence by ensuring that the transaction is real and fraud-free.

Many companies hesitate while trying eCommerce digital signature, but the advantages will make you stick to the decision. Digital signing in eCommerce enhances customer experience while providing complete security.


  1. How is digital signature useful for eCommerce transactions?

    Digital signature in eCommerce provides security against any kind of cyber fraud such as identity theft, payment fraud, fake orders, etc.

  2. What are the applications of digital signature in eCommerce?

    Buyer authentication, integrity, smart card designs, non-repudiation, etc., are some applications of digital signature in eCommerce.

  3. What is the need of digital signature in eCommerce?

    Digital signature in eCommerce plays an important role in ensuring the security of buyers and sellers while conducting online financial transactions.

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