A solution for Apple Watch not working for payment with London Underground terminals.

I suggest you use the phone to pay.

but...

If all settings normal but behaviour is irrational there is a progressive hierarchy of  remedies...

First force restart the Watch 

i.e. press and hold both the side button and Digital Crown for at least 10 seconds, then release both buttons when you see the Apple logo. 

 Then, although it may seem irrelevant, while it is restarting Force Restart the paired iphone   Force restart iPhone – Apple Support (UK) 

Test it for a while. If it is still misbehaving... Unpair and set up again

 Unpair and erase your Apple Watch – Apple Support (UK) 

and then 

Set up your Apple Watch – Apple Support (UK)

 If no better you may want to unpair then set up without restoring the backup. 

You may also want to make sure the software on the watch and iphone  are both up to date. 

Update your Apple Watch - Apple Support 

Update your iPhone or iPad - Apple Support 

If you've completed that troubleshooting and the issue is still not resolved, Contact Support. 

 Click here > Contact - Official Apple Support

or phone numbers  

Click here > Contact Apple for support and service - Apple Support

Do you mean the contactless/Oyster pads

How does the failure present itself? Refusal to pay? Error Message?

Fails to register double-click of side button?

Does your Watch pay at shop tills OK?