You’d think it would be easy and affordable to “electronify” business documents. After all, isn’t it much easier, not to mention faster, to email an invoice rather than send a hard copy in the post? Sounds simple enough, except that, in its infinite wisdom, European law demands that electronic invoices be digitally signed, with a third-party issued certificate. Why? To guarantee that the document hasn’t been tampered with and that it came from the person who appears to have sent it.

Such precautions certainly make sense for contract signing, or orders amounting to millions. For invoices, however, it just might be overkill. As this article (in French) in Belgian business daily L’Echo points out, an invoice itself does not create any obligation to pay, the contract (written or not) is where the debt originates.

More amusing is the comparison between paper and electronic invoices in terms of security requirements. How risky indeed to receive an invoice by email when internet communications are so easily intercepted, and emails so easily forged. Receive the same document on a printed sheet of paper in a sealed envelope? Surely it is from whom it claims to be and can’t possibly have been tampered with. And compelling enough to be paid without questions. At least that is what European law seems to assume.

Another major hurdle to widespread adoption is the rather hefty price charged by most certificate authorities for digital certificates. While not a problem for large corporates, many small businesses and professionals may think twice before shelling out several hundreds of dollars for a one-year digital certificate. That kind of money would indeed buy them a lot of stamps and ink. Not exactly an efficient business case.

Banks could play an important role in moving digital signatures down the value chain, by providing affordable signing applications and digital certificates to smaller businesses and individuals. If they can do it for corporates, it can’t be that difficult to extend the same infrastructure to more modest customer segments.

Filed under: Retail Banking, Technology, regulation