Unable to pair BMW Digital Key to Apple wallet on iPhone 16 Pro (iOS 26.2)

I am trying to add Digital key (of a new 2025 BMW) to my iPhone 16 pro, running iOS 26.2 and each time I try it gives an error on Pairing step.

I have tried on different phones in my family, have tried changing profiles across different iPhones, restarted phone multiple times, reset iDrive and Vehicle as well, but nothing has worked.

Have talked to BMW and they asked to reach Apple Support as there is no trouble in car.

How to get it to work or debug the issue at hand? Need to get the Digital Key plus working.