Basic Web Services support very limited security features. The communication can be secured by using HTTPS and a basic authentication with user name and password can be defined in the connections credentials.
For a properly secured connection extensions need to be used.

Windows Communication Foundation (WCF)

An XML DA client application that bases on WCF can access:

• Regular XML DA web services without security
  The basicHttpBinding has to be used.
  
• WCF based XML DA web services
  The communication can be configured for any of the WCF transports and bindings.
  

This can be achieved with the same code, just by changing the definitions in the application configuration file.

WCF based XML DA server don't necessarily need to be hosted by IIS. They can also be hosted in e.g a Windows service or a Windows Form application. The may also use transports other than HTTP, such as e.g. Named Pipes. Of course in such configurations the XML DA server can only be accessed from WCF based clients.

Applications need to reference XmlDaNetWCF.dll or XmlDaNetWCF.Net4.dll instead of XmlDaNet.dll or XmlDaNet.Net4.dll in order to work through WCF.