Thanks
I did contact the financial institution
Their first reaction was to blame Vicroads accusing them of filling the BPAY vendor registration incorrectly or something.
Contacted Vicroads billing and no one there could help with that presumably that task is outsourced.
I returned to the Financial Institution and directed them to their own PDS.
As result they reverse the fees to waived the interest,
"Cash Advance : Applies if you make a BPAY payment to a biller who doesn't accept credit cards **(we will ask you whether you want to make the BPAY payment as a cash advance before you make the payment).** This fee cannot be avoided if you make a cash advance. You can access cash from any ATM around Australia. Simply select "credit" and then enter your PIN. Using Westpac ATMs will help reduce your fees. You won't pay the industry wide ATM operator fee when you use a Westpac ATM."
from what I can tell we identified a bug where the immediate BPAY payment option blocks payments to non CC accepting BPAY vendors.
However using the scheduled future BPAY payment option their system does not
