I am unable to set up a passcode on my Apple Watch Series 9 for Apple Pay

I see this message on my Apple watch: “Apple Pay requires a passcode on the Apple watch. " When I tried to set the passcode, I realized all the options for the passcode were inactive. I restarted and even reset both the watch and phone, but they didn't help. How can I fix this?

[Re-Titled by Moderator]