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Exported an Adobe Illustrator file for web to upload to Square for receipt logo. Got sizing and such right. Everything looked okay until I saved, and image becomes distorted.
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This happens to me as well. My guess is that the image you're using is not purely black and white. That is, if it has any gradations or any colors have similar brightness to another color in the image, the software will convert it to a purely black/white image so as to be printable on receipt paper.
If my assumption is correct, the only solution would be to edit the image file before uploading it so that there are no gradations and middling-brightness colors are converted to either match the darkest color or the lightest. To be certain of it working, you may just need to covert the image to black/white by hand yourself.
But if I'm wrong, I'd be happy to hear it. 🙂