Key Players Will Drive Use Of Digital Signatures Forward

Rapid growth of online business has introduced a greater need for improved secure delivery of confidential information. Perhaps you are ‘on the road’ on a business trip and need to deliver time-sensitive documents to the main office. How can your colleagues at the main office be sure that you are the person sending the information? How do they know the data has not been altered?

Digital signatures provide a way to address the issues of authentication, non-repudiation and message integrity. In other words, they enable the sender to guarantee his or her identity, confirm the truthfulness of the data sent and ensure the message is not altered as it travels over the Internet. (To learn how a digital signature works go to http://www.youdzone.com/signature.html.)

The effectiveness of digital signatures is supported by the fact that they have been recognized and accepted by various countries and are as legally binding as written signatures in some regions, such as in the United States, which introduced the E-Sign Act (Electronic Signatures in Global and National Commerce Act) in October 2000 to this effect. Canada is also working to legitimize electronic contracts and paperwork.

However, in order for digital signatures to solidify a position in the market a key prerequisite ingredient is support from those players that can drive it forward. Without support from each one there is decreased likelihood of substantial uptake. Government, businesses, and consumers are likely players in the game to push digital signatures forward. What is also needed is a leader that can identify the immediate benefits of digital signatures within its organization and garner respect and trust from the industry to prove the cost-benefits, decrease doubts and increase adoption.

Improved support is required from government, businesses and consumers. The E-sign Act, for example, brings to question the legal status of agreements that are 'signed' using electronic technologies and fails to address privacy and security issues, which means there is no guarantee that consumers will be protected from fraud or unfair business practices. If government cannot ensure the protection of consumers, then chances are consumers will be less likely to adopt digital signatures and businesses that engage in business-to-consumer transactions will have little reason to integrate them in transactions.

Challenges…

There are other specific challenges that businesses and consumers face.

For businesses, one of the largest downfalls is cost. Digital signatures are supported by a complex technology called PKI - Public Key Infrastructure. Since PKI is expensive to develop vendors have priced products to recover investment and generate profits. This means businesses pay high prices to implement digital signature technology. As a result, the use of digital signature technology in business-to-business transactions may be minimal, at least until the technology becomes more common and finds it’s footing in the market. Right now, the technology is not very common, which also means customers and business partners may be hesitant to use it.

There is also the challenge associated with incompatibility of PKI products between different vendors. Dirk Vieira, Senior Information Specialist with EDS, says that because many PKI vendors have their own interpretation of the standards around the technology this has made cross certification a challenge. “From a business perspective, if a choice of one vendor is made, there is the potential that an organization may end up being a ‘PKI island’, without any means to use the technology beyond its walls to conduct trusted electronic business with it’s clients, suppliers and partners.”

In order for businesses to integrate digital signature technology the risk associated with not using it and cost of fraudulent transactions will have to outweigh the challenges.

In addition to lacking an understanding of how digital signatures work, consumers are faced with the problem of having little opportunity to repudiate an order. This is particularly stressful since most digital signature users store their PKI software on their PC and gain access to their digital signature through a password. If an unauthorized user gains access to the password, they can impersonate the owner and wreak havoc. And with laws that do not yet truly protect consumers using digital signatures, the risk associated with using them is particularly high.

Advantages…

Despite some challenges, digital signatures provide advantages to both businesses and consumers. Vieira says, “ (Digital signatures) provide a mechanism that in effect can promote trust between entities, whether they are governments, merchants, or consumers. A merchant can ensure the validity of transactions and the identity of the individual that performed the transaction. Governments and consumers will be more interested in the encryption capabilities, and the use of it to protect sensitive information while it travels across the network, and in storage.”

For businesses, the biggest advantage is reduced risk, particularly for merchants - because digital signatures do not enable customers to easily repudiate an order. As well, businesses can save money by storing their files online, rather than in expensive storage facilities, and cut down on printing, copying, and traditional mailing costs. Business transactions are also faster since contracts do not need to be mailed back and forth for signatures.

For consumers, the biggest benefit is protection of data and increased convenience. With digital signature legislation, consumers can open bank accounts and pay bills from home. Vieira explains, “Merchants will very likely adopt the use of digital signatures, more for online electronic transactions, than for ‘over the counter’ retail type transactions.” Furthermore, “Digital signature legislation, and the liabilities assumed by different parties will be key to this adoption.”

Drivers…

In addition to better laws that protect consumers and clearly define the liabilities of all parties involved in digital signature transactions, organizations that can show the cost-benefits of digital signatures, and garner respect and trust in the marketplace can potentially increase adoption rates. Financial institutions have been a likely candidate for digital signatures. In fact some people believe that without support from banks, digital signature technology will not move forward. Others, like Burt Walker, President of FiNet, believe that banks are not likely candidates. He says, “There was a big push a couple of years ago for banks to embrace it – the defacto issuers of these signatures. Unfortunately, banks are very slow to adopt new technology.”

It is his belief that other organizations like the US Postal Service will make better supporters of digital signatures. In fact, in June 2001, the USPS announced a new service that involved issuing digital signatures on smart cards through post offices across the country using "in-person proofing" as part of the process.

Another likely candidate for digital signatures is the healthcare industry. According to Vieira, “PKI in healthcare will be an important component for the protection of information through encryption, access control, and the non-repudiation of transactions. This adoption will be fueled by the HIPAA legislation in the US.” He also states that PKI will be adopted in government and “will be key to the development of e-government initiatives that will provide more services to citizens at a lower cost.”

It is Vieira’s believe that digital signatures “will become as common as it is now to physically sign our own signature.” But, he says, “We are a long way from this. To achieve this, devices or software will have to become much more tightly integrated with systems and applications that will be required to have electronic signatures, transactions or information digitally signed.”

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With improved legislation, support from players like government, businesses and consumers, and a trusted leader that can showcase the benefits of digital technology, digital signatures have a large opportunity to gain a solid position in the market and bring improved secure delivery of confidential information.

To find out more about PKI technology, visit Where is PKI Going, a Q & A with Mr. Dirk Vieira, Senior Information Specialist with Electronic Data Systems (EDS).