I'm not sure you would want to use fusible on velveteen. You have to iron it on the back and I'm not sure that wouldn't permanently crush the nap on the velveteen. I think you may be able to use Fray Check around te edges to help keep it from fraying and I would probably use a thin layer of fabric glue, not quite to the edges, to adhere it to the background. Then after it dries, you would be able to stitch around it using whichever stitch and thread you like.