Asylum seekers in Indonesia have confirmed that some of them are asking people smugglers for their money back because of the 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.

Young Afghan men talk of the change in policy but say they are still considering going by boat after being told by people smuggling agents that their cases will have to be accepted by Australia.

Several Iranians, meantime, are reportedly preparing to return back to their country, not willing to take the risk of ending up in PNG.

Others, however, have simply asked for their money back.

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.