When importing a real-world heightmap from a file, is there any option other than grayscale?

The company for which I am working needs real terrain to be imported into UE4. Is there any way I can use a file that is NOT grayscale? Since there are only 256 unique levels in the terrain when using grayscale, a lot of information about the terrain is lost (as seen through the obvious terraced effect).

I’d be willing to try anything. Either a trichromatic image (~16.8 million levels) or a file using X,Y,Z coordinates would be ideal as to capture as much detail of a real location as possible. Or really any file that has better resolution that 256.

I am fairly new to UE4 so I feel totally lost in this issue.

8 bit heightmaps are limited to ± 256, you need to use 16 bit raw or png, they have 65536 ± levels

If your struggling to convert send me your raw data’s I can put it into the highest quality possible 16bit png for ya.