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Does this blog post help at all?
In this post, I show how you can use the new binary support in API Gateway to turn this Lambda function into a public API, which you can use to include a binary image file in a POST request and get a thumbnail version of that same image. I also show how you can now use API Gateway and Lambda to create a thumbnail service, which you can use to include a binary image file in a POST request and get a thumbnail version of the same image.
https://aws.amazon.com/blogs/compute/binary-support-for-api-integrations-with-amazon-api-gateway/
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- asked a year ago

That example lambda function no longer exists. So, it is not helpful. It seems that the payload gets converted to BASE64 automatically.