That’s a big mistake PC and you need to get your head around that for future discussion.
The QNH that you are entering into your altimeter via the dial is in no way linked to the transponder.
The reason the transponder reports based on 1013.2 (as noted in the post above) is so that ATC knows exactly what your altitude is, as the ATC system does the conversion at their end based on the current area QNH. Therefore if you have incorrectly set the QNH or not set it at all on your dial, or you’re on a long flight and have moved into a different pressure system, then they will still know pretty much your exact height.
This explains why if you’re watching your ADSB-IN feed from your EFB you may notice someone zipping along at 200 ft across an area where the buildings are bigger than that, because their OUT is in Barometric pressure and Flight Radar 24 isn’t smart enough to know the area QNH for the conversion.
My EFB shows me traffic with a +003 next to it for example so that the QNH is never an issue as I simply know that the other aircraft is 300ft above me. That’s a clever way to do it as if it said 3,500 and you thought you were at 3,200 but your QNH was wrong you’ll be in the poo.
This safety measure assumes that you’re diligently getting your transponder serviced every 2 years and it’s maintained it’s calibration between servicing.