When communicating with a server normally a password is required for access to make changes to the repository stored on the server. You have several options available in MacHg.
Use the https protocol, and have the password for the server stored in the SystemKeychain.
Use the ssh protocol, and ensure that communication is "non-intractive"
Important:All communication with the server is always done using encrypted communication (this is part of https and ssh protocols). Thus you only ever need to worry about password security if someone can obtain direct access to the passwords stored in the system keychain.
One issue with storing your password in the system keychain is that MacHg will contact the server automatically at various intervals to confirm that it is reachable, or to determine the incoming and outgoing counts from this server to other compatible servers etc. Thus it may appear to you that MacHg is accessing the server when it shouldn't be, however these access requests are a normal part of the functioning of MacHg.
Note:If you are having connection problems, it is sometimes easier to include the password in the Server URL since it is clearer what is going on when diagnosing problems.