Warning that it is one of the fastest growing online businesses, Mr Davies told MPs that "behind every image is a child who has been abused, tragically immortalised on the web".
The MP is attempting to pass a law penalising credit card companies that allow computer users to download images of abuse.
Speaking in the House of Commons, he said that users had previously downloaded pornography using their own credit cards.
"These days the new route for users is to hide their identity by using pre-paid credit cards," he said.
"These pre-pay cards are available to adults and children for £100 a time at service stations and high street retailers without the need to provide proof of identity."
The same cards, he said, can be used by children to buy knives and alcohol online.
"All the buyer has to do is put his name and address down as, say, Donald Duck at Buckingham Palace, and away he goes."
Accusing the credit card companies of failing to take pre-emptive action, he said: "There is a lot of money involved and no appetite for voluntary action.
"The more time goes by, the more children are being abused. The more financial momentum these transactions cause, the more child abuse image users and addicts are created.
Mr Davies concluded: "Let the House speak with one voice and send a clear message to those who would have our children abused and those who allow it to happen that we will not stand idly by."
As previously reported, Mr Davies has tabled a Commons motion which has attracted the support of 55 MPs including Llanelli MP Nia Griffith, Aberavon MP Hywel Francis and Carmarthen East and Dinefwr MP Jonathan Edwards.
His proposed law has the support of the Child Exploitation and Online Protection Centre (CEOP). It noted that the online trade in child pornography is increasingly taking place for free, using peer-to-peer software.
Mr Davies's law, the Credit Regulation (Child Pornography) Bill will require government backing if it is to have any chance of getting onto the statute book.