[json] REST API - file (ie images) processing - best practices

There's no easy solution. Each way has their pros and cons . But the canonical way is using the first option: multipart/form-data. As W3 recommendation guide says

The content type "multipart/form-data" should be used for submitting forms that contain files, non-ASCII data, and binary data.

We aren't sending forms,really, but the implicit principle still applies. Using base64 as a binary representation, is incorrect because you're using the incorrect tool for accomplish your goal, in other hand, the second option forces your API clients to do more job in order to consume your API service. You should do the hard work in the server side in order to supply an easy-to-consume API. The first option is not easy to debug, but when you do it, it probably never changes.

Using multipart/form-data you're sticked with the REST/http philosophy. You can view an answer to similar question here.

Another option if mixing the alternatives, you can use multipart/form-data but instead of send every value separate, you can send a value named payload with the json payload inside it. (I tried this approach using ASP.NET WebAPI 2 and works fine).

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