I have added the thumbnail option above from the settings page.

However, the customized product thumbnails do not show up on the cart page.

The thumbnail after payment for the same item shows the customized image.

How can this issue be resolved?

Sometimes it happens due to conflict between plugins, try to deactivate other plugins one by one to check if there's a conflict with another plugin causing the thumbnails not to display properly. Secondly, clear the site's cache as well.