I am facing an issue for a Cloud POS store in test environment where system does not prompt user to enter the serial number for serialized items. And when I try to add the serial number manually, the below message pops up:

Weirdly, for another store with similar configuration but running on Modern POS, I am able to store the serial number. The POS here prompts user to enter it.
Hence this cannot be an issue with the item configuration.
Any suggestions?