diff --git a/server/live-loan-router.js b/server/live-loan-router.js
index 237357943b1..855d4989550 100644
--- a/server/live-loan-router.js
+++ b/server/live-loan-router.js
@@ -1,7 +1,7 @@
 import express from 'express';
 import { error, warn } from './util/log.js';
 import { getFromCache, setToCache } from './util/memJsUtils.js';
-import drawLoanCard from './util/live-loan/live-loan-draw.js';
+import drawLoanCard, { contentTypeForStyle } from './util/live-loan/live-loan-draw.js';
 import fetchLoansByType, { QUERY_TYPE } from './util/live-loan/live-loan-fetch.js';
 import { trace } from './util/mockTrace.js';
 import { resolveBundleSize, DEFAULT_BUNDLE_COUNT, MAX_BUNDLE_COUNT } from './util/live-loan/bundle-size.js';
@@ -193,7 +193,7 @@ async function serveImg(type, style, cache, req, res, queryType = QUERY_TYPE.DEF
 
 	// Separate out sending response to isolate exception catching
 	try {
-		res.contentType('image/jpeg');
+		res.contentType(contentTypeForStyle(style));
 		res.set('Cache-Control', [
 			'no-store, no-cache, must-revalidate, max-age=0, private',
 			'post-check=0, pre-check=0'
diff --git a/server/util/live-loan/compact-card-constants.js b/server/util/live-loan/compact-card-constants.js
index 466ad206db1..7b417f9202c 100644
--- a/server/util/live-loan/compact-card-constants.js
+++ b/server/util/live-loan/compact-card-constants.js
@@ -29,7 +29,7 @@ export const compactCardHeight = compactCardPadding
 // so their position stays put no matter how many lines the use text wraps to.
 export const compactBarY = compactCardHeight - compactCardPadding - compactBarHeight;
 export const compactToGoY = compactBarY - compactToGoBarGap - compactToGoLineHeight;
-// Outer margin around the card, baked onto white, so the drop shadow has room
+// Transparent outer margin around the card, giving the drop shadow room to spread
 export const compactCardMargin = 16;
 export const compactCardDimensions = {
 	width: (compactCardWidth + (2 * compactCardMargin)) * compactResizeFactor,
diff --git a/server/util/live-loan/live-loan-draw.js b/server/util/live-loan/live-loan-draw.js
index 273439ccf48..87df59d5d1e 100644
--- a/server/util/live-loan/live-loan-draw.js
+++ b/server/util/live-loan/live-loan-draw.js
@@ -404,7 +404,9 @@ async function drawClassic(loanData, { skipButton = false } = {}) {
 
 async function drawCompact(loanData) {
 	const canvas = trace('compactCanvasPool.use', () => compactCanvasPool.use());
-	const ctx = trace('canvas.getContext', () => canvas.getContext('2d', { alpha: false }));
+	// Alpha channel kept so the margin stays transparent (PNG export) and the drop
+	// shadow composites over a dark email background instead of a baked-in white.
+	const ctx = trace('canvas.getContext', () => canvas.getContext('2d'));
 
 	try {
 		// Work in logical (unscaled) units; the pooled canvas is reused so reset
@@ -414,11 +416,13 @@ async function drawCompact(loanData) {
 			ctx.textAlign = 'left';
 			ctx.textBaseline = 'top';
 
-			// White background across the whole image (incl. the shadow margin)
-			ctx.fillStyle = compactColors.white;
-			ctx.fillRect(0, 0, compactCardWidth + (2 * compactCardMargin), compactCardHeight + (2 * compactCardMargin));
+			// Clear to transparent (the pooled canvas holds the previous render) so the
+			// margin stays empty and the card + shadow composite onto the email background
+			const fullWidth = compactCardWidth + (2 * compactCardMargin);
+			const fullHeight = compactCardHeight + (2 * compactCardMargin);
+			ctx.clearRect(0, 0, fullWidth, fullHeight);
 
-			// Card with a subtle drop shadow, baked onto the white background
+			// Card with a subtle drop shadow over the transparent margin
 			ctx.save();
 			ctx.shadowColor = 'rgba(0, 0, 0, 0.08)';
 			ctx.shadowBlur = 12;
@@ -526,7 +530,7 @@ async function drawCompact(loanData) {
 		// Undo the card translate + clip so the pooled canvas is clean for reuse
 		ctx.restore();
 
-		const buffer = trace('export-jpeg', () => canvas.toBuffer('image/jpeg', { quality: 0.5 }));
+		const buffer = trace('export-png', () => canvas.toBuffer('image/png'));
 		trace('compactCanvasPool.recycle', () => compactCanvasPool.recycle(canvas));
 		return { buffer, hasBorrowerImage };
 	} catch (e) {
@@ -537,6 +541,13 @@ async function drawCompact(loanData) {
 	}
 }
 
+// The compact card exports PNG so its transparent margin + drop shadow survive
+// on dark email backgrounds; every other style stays JPEG. The router reads this
+// for the response header, including cache hits where the drawn buffer is gone.
+export function contentTypeForStyle(style) {
+	return style === 'compact-bundle' ? 'image/png' : 'image/jpeg';
+}
+
 export default async function draw(loanData, style) {
 	switch (style) {
 		case 'bundle':
diff --git a/test/unit/specs/server/live-loan-router.spec.js b/test/unit/specs/server/live-loan-router.spec.js
index 0e49a139dda..61f647cd085 100644
--- a/test/unit/specs/server/live-loan-router.spec.js
+++ b/test/unit/specs/server/live-loan-router.spec.js
@@ -9,7 +9,12 @@ import { generateGoogleFeed } from '#server/util/live-loan/ads/google-display/go
 // Mock out modules to prevent real network/cache calls
 vi.mock('#server/util/live-loan/live-loan-fetch');
 vi.mock('#server/util/memJsUtils');
-vi.mock('#server/util/live-loan/live-loan-draw');
+// Keep the real contentTypeForStyle (the router uses it for the response header);
+// only the heavy canvas render (default export) is mocked out.
+vi.mock('#server/util/live-loan/live-loan-draw', async importOriginal => ({
+	...(await importOriginal()),
+	default: vi.fn(),
+}));
 vi.mock('#server/util/live-loan/ads/google-display/google-feed');
 vi.mock('#server/util/log', () => ({
 	log: vi.fn(),
@@ -452,10 +457,10 @@ describe('live-loan-router bundle-url routes', () => {
 
 	describe('serveImg - bundle-img-compact routes', () => {
 		beforeEach(() => {
-			drawLoanCard.mockResolvedValue({ buffer: Buffer.from('jpeg-bytes'), hasBorrowerImage: true });
+			drawLoanCard.mockResolvedValue({ buffer: Buffer.from('png-bytes'), hasBorrowerImage: true });
 		});
 
-		it('serves jpeg for /u/:id/bundle-img-compact/:offset with compact-bundle style', async () => {
+		it('serves png for /u/:id/bundle-img-compact/:offset with compact-bundle style', async () => {
 			liveLoanFetch.default.mockResolvedValue([
 				{ id: 1 }, { id: 2 }, { id: 3 }, { id: 4 }, { id: 5 }, { id: 6 },
 			]);
@@ -464,7 +469,7 @@ describe('live-loan-router bundle-url routes', () => {
 			const result = await makeRequest(app, '/live-loan/u/42/bundle-img-compact/1');
 
 			expect(result.statusCode).toBe(200);
-			expect(result.headers['content-type']).toBe('image/jpeg');
+			expect(result.headers['content-type']).toBe('image/png');
 			expect(drawLoanCard).toHaveBeenCalledWith({ id: 1 }, 'compact-bundle');
 			expect(liveLoanFetch.default).toHaveBeenCalledWith(
 				'user',
@@ -481,7 +486,7 @@ describe('live-loan-router bundle-url routes', () => {
 			const result = await makeRequest(app, '/live-loan/flss/u/42/bundle-img-compact/2');
 
 			expect(result.statusCode).toBe(200);
-			expect(result.headers['content-type']).toBe('image/jpeg');
+			expect(result.headers['content-type']).toBe('image/png');
 			expect(drawLoanCard).toHaveBeenCalledWith({ id: 22 }, 'compact-bundle');
 			expect(liveLoanFetch.default).toHaveBeenCalledWith(
 				'user',
@@ -498,7 +503,7 @@ describe('live-loan-router bundle-url routes', () => {
 			const result = await makeRequest(app, '/live-loan/recommendations/u/42/bundle-img-compact/1');
 
 			expect(result.statusCode).toBe(200);
-			expect(result.headers['content-type']).toBe('image/jpeg');
+			expect(result.headers['content-type']).toBe('image/png');
 			expect(drawLoanCard).toHaveBeenCalledWith({ id: 33 }, 'compact-bundle');
 			expect(liveLoanFetch.default).toHaveBeenCalledWith(
 				'user',
diff --git a/test/unit/specs/server/util/live-loan/live-loan-draw.spec.js b/test/unit/specs/server/util/live-loan/live-loan-draw.spec.js
index 27ce8791426..5f15c46a216 100644
--- a/test/unit/specs/server/util/live-loan/live-loan-draw.spec.js
+++ b/test/unit/specs/server/util/live-loan/live-loan-draw.spec.js
@@ -1,6 +1,6 @@
 // @vitest-environment node
 import { createCanvas, loadImage } from 'canvas';
-import draw, { compactCardDimensions } from '#server/util/live-loan/live-loan-draw';
+import draw, { compactCardDimensions, contentTypeForStyle } from '#server/util/live-loan/live-loan-draw';
 import { compactColors } from '#server/util/live-loan/compact-card-constants';
 import * as canvasImageUtils from '#server/util/live-loan/canvas-image-utils';
 
@@ -44,17 +44,22 @@ async function dimensionsOf(buffer) {
 	return { width: img.width, height: img.height };
 }
 
+// Decodes an image buffer onto a canvas context so its pixels can be sampled
+async function decodeToContext(buffer) {
+	const img = await loadImage(buffer);
+	const ctx = createCanvas(img.width, img.height).getContext('2d');
+	ctx.drawImage(img, 0, 0);
+	return { ctx, width: img.width, height: img.height };
+}
+
 // Finds the bottom-most device row containing the progress-track grey in a
 // 1px-wide strip on the right half of the bar, which locates the bar vertically.
 async function barBottomY(buffer) {
-	const img = await loadImage(buffer);
-	const canvas = createCanvas(img.width, img.height);
-	const ctx = canvas.getContext('2d');
-	ctx.drawImage(img, 0, 0);
-	const x = Math.round(img.width * SAMPLE_X_FRACTION);
-	const { data } = ctx.getImageData(x, 0, 1, img.height);
+	const { ctx, width, height } = await decodeToContext(buffer);
+	const x = Math.round(width * SAMPLE_X_FRACTION);
+	const { data } = ctx.getImageData(x, 0, 1, height);
 	let lastTrackRow = -1;
-	for (let y = 0; y < img.height; y += 1) {
+	for (let y = 0; y < height; y += 1) {
 		const r = data[(y * 4)];
 		const g = data[(y * 4) + 1];
 		const b = data[(y * 4) + 2];
@@ -76,14 +81,26 @@ describe('draw – compact-bundle style', () => {
 		});
 	});
 
-	it('renders the compact-bundle style as a compact-sized JPEG', async () => {
+	it('renders the compact-bundle style as a compact-sized PNG', async () => {
 		const { buffer, hasBorrowerImage } = await draw(makeLoan(), 'compact-bundle');
 
 		expect(Buffer.isBuffer(buffer)).toBe(true);
 		expect(hasBorrowerImage).toBe(true);
+		// PNG signature bytes, so the card can carry an alpha channel
+		expect(buffer.subarray(0, 8).toString('hex')).toBe('89504e470d0a1a0a');
 		expect(await dimensionsOf(buffer)).toEqual(compactCardDimensions);
 	});
 
+	it('renders a transparent margin around the card so it composites on any background', async () => {
+		const { buffer } = await draw(makeLoan(), 'compact-bundle');
+
+		const { ctx } = await decodeToContext(buffer);
+		// The outer corner sits in the margin outside the card, so it must be fully transparent
+		const cornerAlpha = ctx.getImageData(0, 0, 1, 1).data[3];
+
+		expect(cornerAlpha).toBe(0);
+	});
+
 	it('passes hasBorrowerImage through when the borrower photo is missing', async () => {
 		canvasImageUtils.loadBorrowerImage.mockResolvedValue({
 			image: fakeBorrowerImage(),
@@ -128,4 +145,11 @@ describe('draw – compact-bundle style', () => {
 		const dims = await dimensionsOf(buffer);
 		expect(dims).not.toEqual(compactCardDimensions);
 	});
+
+	it('maps only the compact-bundle style to PNG, other styles to JPEG', () => {
+		expect(contentTypeForStyle('compact-bundle')).toBe('image/png');
+		expect(contentTypeForStyle('bundle')).toBe('image/jpeg');
+		expect(contentTypeForStyle('classic')).toBe('image/jpeg');
+		expect(contentTypeForStyle('legacy')).toBe('image/jpeg');
+	});
 });