assuming you use a s3-compatible storage system:

1. generate presigned URLs
2. send the presigned URLs to the client
3. upload directly to those URLs from the client

for step 3:
* you may need to set up some logic to orchestrate uploading because 500MB is a gigantic amount
* also need to handle user having bad internet connection

The tricky part is that the image needs to have a watermark, but once purchased, it should be delivered as the original, unwatermarked version.

My plan was to avoid using S3, as it requires additional setup and knowledge from the customer. However, if there's no other way to accomplish this without S3, I might end up using it anyway.

there shouldn't be any knowledge from the customer though, all of this is on the code level.

you don't need to use s3 but whatever storage system you use, it needs to have a way for the client to upload to that storage directly from the browser. the nextjs server likely cannot be the middleman for such a big payload.

after uploading the original version you can run a script or something to generate a watermarked version to also store inside the storage system