Organizations are starting to rethink their business models to be more internet-focused. We see businesses buying and selling products and services, processing payments and receipts, signing documents, automating processes, onboarding employees, filling out forms, and more – all done online.
What is Electronic Transaction?
An electronic transaction is a process of exchanging electronic data within computer-mediated networks. The data being exchanged digitally contains electric records.
Not all electronic transactions are limited by electronically exchanging money or electronic payments, it also involves the transaction of data and messages that can be processed online. For example, electronic management of documents require digitally signing documents before their distribution.
Other examples of electronic transaction services we see today include:
- data processing
- online authentication
- digital and electronic signing (through digital certificates and digital signing platforms)
- online fund transfer (through digital wallets, bank apps or websites)
- electronic tax filing
- wire transfer
National law may assign full or partial legal validity to electronic transactions. There is already an established legal recognition among national laws that acknowledges the use of electronic transactions. One example is seen in Subsection 8 of the Electronic Transactions Act 1999 of Australia:
Validity of electronic transactionsFor the purposes of a law of the Commonwealth, a transaction is not invalid because it took place wholly or partly by means of one or more electronic communications.
That said, other laws recognize only those that comply with certain requirements. One such example is Section 4 of Nepal’s Ordinance No. 32 of the year 2061:
Legal Recognition of Electronic Record:Where the law in force requires any information, documents, records, or any other matters to be kept in written or printed typewritten form, then, if such information, documents, records, or the matters are maintained in an electronic form by fulfilling the procedures as stipulated in this Ordinance or the Rules made hereunder, such electronic record shall also have legal validity.
Electronic Transactions act
As mentioned, some national laws have provisions on the legality of electronic contracts. These provisions aim to clarify that the electronic form of such documents do not invalidate them.
Let’s look at some of the examples of Electronic Transactions Act within the APAC Region below:
Singapore: Electronic Transaction Act of 2010 Chapter 88SG recognizes the legal validity of electronic communications in the acceptance of concluding contracts and declares its validity. Electronic and digital signatures are also as legal as a handwritten signature.
China: The Electronic Law of the People's Republic of China passed in 2005 and amended in 2015 (E-signature law)CN recognizes the legality of electronic signatures and can be used as evidence in Court.
Hong Kong: Hongkong Electronic Transaction Ordinance Act of 2000HK establishes the legal framework in the acceptance of electronic records and signatures, granting them the same legal standing as a handwritten signature.
Indonesia: Law No. 11 of 2008 as amended by Law No. 19 of 2016 on Electronic Information and Transactions (“EIT Law”)ID recognizes “electronic information/documents and/or its printed results” are binding and are valid legal evidence. Likewise, electronic signatures are also as valid as handwritten signatures.
Malaysia: The Digital Signature Act of 1997MY ensures “the security of legal issues related to electronic transactions and verifies the use of digital signatures through certificates issued by licensed Certification Authority (CA).”
Philippines: REPUBLIC ACT NO. 8792 or the Electronic Commerce Act of 2000 and the Rules on electronic evidenceAs per Sec. 8 R.A. 8792, “An electronic signature on the electronic document shall be equivalent to the signature of a person on a written document if that signature is proved by showing that a prescribed procedure, not alterable by the parties interested in the electronic document.”
South Korea: Framework Act on Electronic Trade (“FAET”) and the Electronic Signature Act (“ESA”) of July 1999, and Digital Signature Act (Act No. 14577)KR recognizes electronic and digital signatures with the same validity as handwritten signatures. Uncertified electronic signatures are valid so long as both contracting parties agree.
Thailand: Electronic Transaction Act 2001TH recognizes the validity of electronic data so long as it is done in accordance with the rules and procedures of the Royal Decree.
Vietnam: Law No. 51 or the Law on E-transactions 2005 as amended by Resolution 51/2001/QH10 of 25/12/2001VN acknowledges the validity and admissibility of data messages as having the same legal standing as a written document.
If you are from APAC and want to learn more about the Electronic Transactions Act and electronic and digital signature laws within your country, here’s a comprehensive list of the legality guidelines within APAC.
What is the purpose of the Electronic Transaction Acts?
Electronic Transactions Acts were created to facilitate the use of data messages. It is to certify to all parties the authenticity and validity of data messages or electronic data as authorized by the law. These laws streamline the use of electronic transactions, such as electronic and digital signatures, so all parties recognize its uses and limitations.
How can businesses adopt electronic transactions?
The growth of electronic transactions gave rise to new requirements that businesses must adopt. This includes new laws and best practices to ensure the safety and security of data during online transactions. Nowadays, it is a prerequisite to use encryption and digital certificates to guard companies against cyber threats and scams.
Businesses that are generally communicating to their clients, colleagues, and partners online must be equipped with the right online solutions so they can easily adapt to electronic transactions.
For example, electronic and digital signatures can be used across various industries that want to secure their electronic transactions. This includes a variety of documents such as invoices, e-prescriptions, sales agreements, itineraries, staff onboarding, etc.
Certificate Authorities (CAs), or those that are given the authority to issue digital certificates, play a big role in ensuring businesses remain secure when conducting electronic transactions. Using electronic and digital signatures as well as the accompanying digital certificates to sign business-related documents are considered best practice when exchanging data and information online.
Moreover, electronic and digital signatures make managing online documents easier since documents can be sent and signed faster. By using electronic and digital signatures, companies are more confident since they know that their communications are encrypted, and their data is secure.
Whichever industry you may be in, you can adapt to electronic transactions securely using reliable digital signing solutions which we will discuss later.
Are electronic transactions secure?
Electronic transactions are generally secure. However, risks can arise if a business fails to follow the imposed security protocols. Now, let’s focus on these risks and what businesses can do to secure electronic transactions:
What are the risks of electronic transactions?
- Improper processing of transactions.
- Changes in the original data.
- Access to data due to data breaches.
- Unauthorized systems access.
- Non-enforceability of contracts, etc.
How can businesses secure electronic transactions?
Don’t worry, though! A good digital signing solution eliminates the risks and security-related issues companies often face when using electronic transactions. For example, a subset of standard protocols for ensuring credit card companies remain secure over insecure networks is called the Secure Electronic Transaction (SET). It uses digital certificates and public key infrastructure (PKI) to ensure a secure connection and to ensure that information being transferred is done securely.
When securing electronic transactions, there are key elements that businesses must incorporate and meet:
- Integrity of data
- Confidentiality of information
- Non-repudiation of information
- Authentication of user and merchant
With the help of a Certificate Authority (CA), businesses can secure their electronic transactions as CAs are equipped with the knowledge and expertise when it comes to online security.
GlobalSign can help pave the way for a completely secure electronic transaction through our different signing solutions:
- GMO Sign. Documents often take days to get signed and they pile up, making them difficult to manage. But not with GMO Sign. Our signing solution streamlines your company’s entire signing process. You can send documents and have them signed within the day—allowing you to check the real-time status of documents and avoid unnecessary delays. GMO Sign also encrypts of your documents, to protect your data from cyberattacks and data breaches.
- Digital Signing Service (DSS). Secure your electronic transactions with a flexible document singing solution for any office workflow. DSS is easy to use and lets you sign documents regardless of your OS or platform—in just a few clicks! DSS can be integrated with Adobe Sign, DocuSign, and other popular document platforms by connecting you to the cloud. It offers key features such as timestamping service, key management feature, revocation check, etc.
- Adobe Approved Trust List (AATL) Certificates. Businesses that often create PDF and Office files for signing can maximize the benefits AATL can offer. This signature solution automatically verifies to the receiver that the author's identity has been confirmed by a trusted organization. Let your recipients know that the document is authentic, verified, and ensure the content has not been altered since being digitally signed.