Dick Satran
SAN FRANCISCO: Don't expect to be clicking on the dotted line overnight now
that the President has signed a bill that makes digital signatures legally
binding.
E-commerce specialists say that the law will have far-reaching effects over
time, eliminating tons of paper work and saving billions of dollars on
transactions ranging from mortgages to stock purchases. But the immediate impact
won't be easy to see.
Even as President Bill Clinton signed the bill into law using an electronic
card Friday, he needed to pull out a quilled pen to make a physical signature,
just to make sure the act was legal.
Future electronic signatures, though, will at least have the weight of
federal law behind them. The bill passed by Congress eliminates legal barriers
to using electronic technology to form and sign contracts, collect and store
documents and send and receive notices and disclosures.
Most businesses, though, are not equipped with an infrastructure to make
digital signatures work in the real economy. While the technology is already
well developed for verifying and securing transactions electronically, it's not
widely deployed.
"It's not going to be an overnight sensation," said e-commerce
specialist with Chicago-based law firm Wildman, Harrold, Allen & Dixon,
Anthony Abboud. "But now companies have been freed up to conduct business
more electronically and this will drive them to do it."
Lines of code
Some companies already have been using digital signatures, which are heavily
encrypted bits of unique computer code that can represent physical signatures.
Some companies also offer digital "snapshots" of consumer's
signatures, which can also be converted into secure codes.
But even consumers who shop frequently online are not likely to start using
these virtual signatures anytime soon.
"It will probably take five years or so before they become
commonplace," said Abboud.
Businesses, though, are likely to step up their efforts to put more paperwork
into electronic form, since it can save them money. The law itself does nothing
to create federal requirements or repositories for signatures. That will be left
to the marketplace, as will the issue of creating security surrounding digital
transactions.
Still, by recognizing the right of businesses and consumers to agree to
digital binders, the law could speed up the process of putting digital
signatures into play.
"This will make all kinds of financial transactions faster and
easier," said Brooks Fischer, vice president of corporate strategy at
Quicken.com owner Intuit Inc., a leading online provider of tax software,
mortgages and insurance.
Big-ticket items
The first area in which the digital signatures are likely to make a mark are in
purchases of big-ticket items like homes and cars that require large amounts of
paperwork to complete, especially when bank financing is involved. Companies
that can digitize those deals could win customers with faster and cheaper
service,
Corporate enterprises, too, are ripe for digitization, since documents with
signatures affixed are costly and time consuming. Already, the Utah-based
technology company iLumin Corp. claimed on Thursday the first end-to-end online
home purchase. Utah allows digital signatures in its existing state law.
But e-commerce experts believe that it will take some time before routine
retail transactions will be handled by digital means. Eventually, though, it
will happen, they say. They see a time when a thumbprint that's recognized by a
credit card company could suffice to buy an item in a store equipped with a
thumbprint scanner, for example.
Security will play an important role in the development of e-signatures,
experts say. "A single well-publicized case of fraud using digital
signatures could scare people from using them," said Abboud.
But the marketplace could also help meter out the right level of security for
each transaction.
"A higher level of security will cost more," said Brent Israelsen
of iLumin Corp. "You have to look at the type of transaction–if it's
somebody buying a fishing license online for $5, it probably doesn't matter
much. If it's a doctor renewing a medical license, you want to be more careful
about how it's done."
(C) Reuters Limited 2000.