HTTP Digest Authentication is configured similarly to HTTP Basic Authentication. Digest authentication adds the username and password as a hashed string to the Authorization header.
To configure HTTP Digest Authentication, select the Http-Security tab within the REST Resource Security Configuration dialog and choose the Authentication Type Digest Authentication.
Alternatively, you can set your own Authorization header using field substitutions within your REST Web Service Resource. Digest authentication is an application of MD5 cryptographic hashing for more information see here. You can use services.encryption to hash your credentials.
Digest authentication provides an additional layer of protection against phishing attacks and replay attacks. This makes digest authentication suitable to use on networks which aren’t secured by TLS.