In Xfce 4.10 you used to be able to change a window’s transparency by holding the mouse cursor over its title bar and scroll the mousewheel up or down. If you try that in Xfce 4.12 you’ll notice that that zooms the entire desktop in or out.

Setting the ‘special’ key to something other than the default alt key doesn’t help here. Disbaling the zoom function does.

From the Xfce Menu, choose Settings > Setting Editor. In the Channel pane select ‘xfwm4’ and in the right pane scroll all the way down to ‘zoom_desktop’. Uncheck the Value box.

Transparency should now work again!