An Australian lawyer, Julian Burnside, says Nauru will charge Australia 75 000 US dollars each month for the visa of an Iraqi refugee on Nauru, Mohammed Sagar.
Australia has labelled Mr Sagar a security risk and has been held in Nauru for nearly five years without any resettlement option in sight.
Last month, Nauru decided to charge Australia a visa fee in a bid to speed up the processing of asylum claims.
Mr Sagar's visa expired at the end of August, and Mr Burnside says the Nauru government decided to take action.
"My understanding is that the Nauruan Cabinet has just decided that it will renew the visa for Mohammed Sagar, but it will impose a fee of 100 000 Australian dollars, which of course the Australian government will have to pay, that will get a one month visa and presumably if that is accepted then it will be renewed month after month at the same price."
Mr Burnside says the Australian government has made no comment yet.
Nauru's Foreign Minister, David Adeang, said earlier should Australia not recognise his government's decision, Nauru would not accept any new asylum seekers sent by Australia.