Hi,
Which is the format of your watermark image ?
I made some tests and if your image is a png you should let the opacity to 100%, at this moment, the transparency would be used correctly.
The PNG should not be compressed with special "encoding" in order to be properly open by PHP GD.
Regards,
Jerome - Obsidev.com
HikaMarket & HikaSerial developer / HikaShop core dev team.
Also helping the HikaShop support team when having some time or couldn't sleep.
By the way, do not send me private message, use the "contact us" form instead.