Asylum seekers in Indonesia have confirmed that some of them are asking people smugglers for their money back because of Australia's new PNG policy.
Australia has signed a memorandum of understanding (MOU) with Papua New Guinea to send asylum seekers to PNG to be processed and resettled there if they are found to be refugees.
News of the policy has reached Cisaura, in West Java, home to some of the thousands of asylum seekers stuck in Indonesia.
The ABC has learnt some asylum seekers have asked for their money back from people smuggling agents, and have succeeded in getting a refund.
|Boat People. Getty Images|
Asylum seekers tell the ABC it is mainly Iranians who are asking for refunds and are reportedly preparing to return back to their country, not willing to take the risk of ending up in PNG.
But the PNG policy is still causing confusion among Afghan asylum seekers - some of whom say they will still try and come to Australia by boat.Young Afghan men talk of the change in policy but say they are still considering going to Australia after being told by people smugglers that their cases will have to be accepted by Australia.
People smugglers are saying Australia will still accept refugees from places like Afghanistan and Pakistan because they have a more compelling case.
A 17-year-old boy from Afghanistan told the ABC he still has some hope of reaching Australia.
"The agent people and some of my friends said it's a lie; the people are not sent to PNG, the people who arrive at Christmas Island end up in Australia," he said.
The Australian Government says its harsh new policy is having an impact.
On Tuesday, Immigration Minister Tony Burke watched on as PNG's foreign minister, Rimbink Pato, signed the MOU document at a small ceremony in Port Moresby.
Mr Burke said there could now be no doubt about the legally-binding nature of the agreement between the two countries.
ABC News/PNG Today