I had same issue, can be resolved by checking few things.
The error says contact card issuer however the issue is from apple side. I had this issue 4 years ago with one bank. Got same issue again with different card same bank. However I was able to add other bank cards in my iPhone without any issues.
Things to check:
1) Date and Time settings: Make sure Date and Time is set to 'Auto', If already on auto try to toggle it and restart phone.
=> If Date time is greyed out, Disable 'ScreenTime' and ScreenTime content and restrictions by going to 'Settings -> ScreenTime -> Content & Privacy Restrictions -> Toggle off'
=> Turn off Stolen device protection by going to 'Settings -> Face ID and Passcode -> Toggle of Stolen Device Protection'
=> Enable location for Time Zone 'Settings -> Privacy & Security -> Location services -> System Services -> Setting Time Zone -> Toggle on
2) Try adding card in different way.
=> Try adding card from bank's app directly, if they have this feature
=> try adding card from by going to apple wallet and then add card -> scan card
=> try adding card from by going to apple wallet and then add card -> Manually enter card details
note: In my case bank said the name should match exactly as appear on the card, however I was able to add it by entering just short name.
3) Most important step that resolved my issue.
=> Check your device name: Go to 'Settings -> General -> About -> Name'. Make sure there is no special characters in device name. For example change name from 'John's iPhone' to 'iPhone'.
Note: for some reason adding card won't work if you have special characters in device name. This should be reason why it works in you Mac/watch for example and won't work in iPhone.
Also not all the banks are same, I was able to add one of the banks card without any issues even with special characters in my device name. However I wasn't able to add another banks card. I would take it positively as more complexity add more security lol.
I had this issue 4 years ago and happened again today, I didn't remember solution nor i was able to find on internet. I'm adding it here so it might help others and me in future lol.