I can’t give direct experience on this because AP Cash is not available yet here in UK, but I will try some Guesswork. It sounds like the problem is something timing out when trying to setup the Cash option.
Your card provider might not support Apple Pay Cash on watch. Try skipping the Cash setup and just do traditional Apple pay. You can always add the cash option later after troubleshooting with your card provider.
If you can’t setup basic Apple Pay on your watch ( is already on your iphone so we know it is supported for your card) it could be something as simple as your card provider rejecting for security checks, or having technical problems accepting the setup request. That’s a try again tomorrow or even after the weekend when you can call the card provider and see if there was any reason you were unable to proceed.