You clip the permit onto the saddle, or, if small enough, attach it to the bridle. Which is a right pain if you switch saddles and forget your permit. (Thank you, Epping Forest and the Act of Parliament to close the bridleways.

The only time I've ridden on a towpath (over a period of two days), my permit was "Dave at X lock said it was fine".

Since Dave was a senior inspector and the canal was in the process of restoration, it was indeed fine.