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Will an Electronic Signature Hold Up in Court?

Will an Electronic Signature Hold Up in Court?
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In the age of convenience, it’s no surprise that documents — and even signatures — are being digitized. In comparison to the old process of mailing documents to obtain a signature or requiring a customer to visit your business, digital signatures offer an efficiency boon for businesses and customers alike.

You’ve likely shopped at a business that had an electronic PIN pad that prompted you to sign on the screen instead of printed receipt paper. If you’re a business owner, this likely prompted you to wonder, “Are electronic signatures as legally binding as traditional paper signatures?” If you’re considering upgrading to a paperless credit card terminal, the answer to this question could be critical for your business because a signed receipt is necessary in the event of a chargeback.

The benefits, however, are numerous. For one, collecting them eliminates the detrimental environmental impact of paper receipts, which consume tons of natural resources and produce waste (thermal paper receipts aren’t biodegradable). For another, they make it easy for businesses to obtain signatures for remote orders, which defend them from chargebacks on phone and online transactions.

The benefits continue and sound great, but do electronic signatures hold up in court? The short answer is yes due to two important pieces of legislation: the Uniform Electronic Transactions Act (UETA) and the United States Electronic Signatures in Global and National Commerce Act (ESIGN). The main exceptions are:

  • Creation and execution of wills
  • Adoption, divorce and other family law
  • Uniform commercial code
  • Court documents

For the purposes of this post, we’ll focus on payments, which are protected under federal law.

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The Protections Granted by UETA and ESIGN

UETA was first introduced in 1999 to address legal requests for written signatures. UETA deemed electronic signatures a satisfactory substitute for a traditional signature so long as all parties agreed to proceed electronically. As a state law, UETA does not apply to the entire U.S.; 47 U.S. states, in addition to the District of Columbia and the U.S. Virgin Islands, have adopted UETA. The only states that haven’t enacted UETA are Washington, Illinois, New York and the U.S. territory of Puerto Rico, according to the Uniform Law Commission.

The ESIGN Act, in contrast, is a federal law that applies to the entire U.S. The ESIGN Act was passed in 2000 and applies the same concept of recognizing an electronic signature as equivalent to a traditional one, but for expanded use cases beyond legal documents.

In short, federal law recognizes electronic signatures as sufficient authorization for credit card, debit card and ACH payments.

Electronic Signatures Are More Secure

Beyond some of the benefits we listed above, can electronic signatures provide even more security for your business? They certainly can. First off, they offer more evidence about the particular person who signed the receipt than traditional signatures do. For remote orders, electronic signatures track the location of the signer through his IP address. If a purchase is signed for internationally with a credit card that has a U.S. billing address, you can do your due diligence to follow up and ensure the purchase isn’t fraudulent.

Electronic receipts are more reliable than traditional paper ones. They can be stored in the cloud and accessible with a simple search. This means you save precious time filing away receipts, transporting them to storage facilities and searching for one in the event of a chargeback.

Most businesses hold onto paper receipts for up to seven years to prove authorization was granted. Over this time period, a thermal paper receipt is vulnerable to heat damage and fading, rendering it useless in a transaction dispute.

Capture Electronic Signatures

By opting for a Smart Terminal that accepts electronic signatures, your business can reduce its waste and paper receipt costs while obtaining authorization for every purchase regardless of where it occurs.

The digital age isn’t going away anytime soon. Opting for a future-ready Smart Terminal that’s customer-facing, accepts electronic signatures and moves your business into the digital age is a smart and lawful move.

Learn more benefits of digital signatures.


Is your business still relying on paper receipts? Are you trying to reduce your environmental footprint? Let us know your thoughts on the topic discussed above in the comments section below.

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Christina Lavingia

Christina Lavingia delights in crafting content that helps business owners fight fraud, reduce risk and process payments with ease.

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