i use yale padlocks short shank 1 key fits all 5 padlocks in the set stick some velcro on the pack to stop them damaging the panniers picked them up from my local locksmiths
40mm with a standard 6mm shank is the maximum, I believe. They are reasonably easily found in "same key" 4 packs for around £15-20. The "rekeyed by local locksmith" approach might actually be cheaper.
I've used them with the Steptoe velcro mod on both Caja Sahels and Touratech. It works fine.