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Jun 09, 2023

Are Digital Signatures Legally Binding?

Digital signatures are indeed widely used nowadays. Did you know? Digital signatures have the same legal value as physical signatures.

Using digital signatures, sending signed documents only requires internet access and electronic devices. Currently, the use of digital signatures is quite common. Many companies and individuals have adopted digital signatures to sign various documents. Efficiency and convenience are critical attributes of digital signatures. Firstly, they save time as there's no need to print, sign, and physically deliver documents.

Secondly, digital signatures help reduce company expenses. Unlike physical signatures that involve printing, ink, stationery, and courier costs, digital signatures require internet access and electronic devices for sending signed documents.

Furthermore, with the rise of cybercrime, electronic signatures were created to mitigate such threats. But the question remains: do digital signatures hold the same legal value as physical signatures? Are there regulations discussing the legality of digital signatures?

Regulations on Digital Signatures
Many people still prefer physical signatures over digital ones due to security and trust issues. Rest assured if you are hesitant about using digital signatures because of their validity. The use of digital signatures is regulated by Law No. 11 of 2008 on Electronic Information and Transactions (ITE). This law specifies certain requirements for a valid digital signature.

The requirements for a valid digital signature, as stated in the law, include:
Data used for creating the digital signature is known only to the signature owner. Only the signature owner has the right to use the digital signature. Any changes made after the creation of the digital signature can be detected.

All changes to electronic information related to the digital signature can be detected. There must be a way to identify the owner of the digital signature. There must be a way to verify that the owner of the digital signature has approved the related electronic information.

In addition to these regulations, provisions regarding digital signatures are also outlined in Government Regulation No. 82 of 2012 on the Implementation of Electronic Systems and Transactions.

Law No. 11 of 2008 and Government Regulation No. 82 of 2012 have recognized the legality of digital signatures for over 10 years. Moreover, both regulations explain the conditions for digital signatures to be legally valid.

With the emergence of new digital platforms in the fintech field, the Financial Services Authority (OJK) has issued POJK No. 77 of 2016 on Information Technology-Based Lending and Borrowing Services.

Article 41, paragraph (1) states that agreements referred to in Article 18 of POJK can be executed using digital signatures. Not only that, but OJK also issued Circular Letter No. 18/SEOJK.02/2017 on the Governance and Risk Management of Information Technology for Information Technology-Based Lending and Borrowing Services.

So, what are you waiting for? Contact us to learn more about digital signatures. 

VIDA - Verified Identity for All. VIDA provides a trusted digital identity platform.

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