Applying Decal with Transparent Background to Colored Surface

Hello,

Sorry if this has been covered somewhere, I haven't been able to find it if it has. My problem is, I'm trying to apply a decal (.png file) that has a transparent background on it and I'm applying it to a colored surface. Once I apply it, the "transparent" background comes through as the default grey color that comes up whenever you make a new part (see picture below). So my question is: How do I get the transparent background to come through correctly in this application?

I appreciate any help you can provide.

Thanks,

Sam Lamb