Step 1 : Open the image you’ll be using for the text. Here, we’ll be using the wrinkled paper texture below. You can download the stock HERE.
Step 2 : Go to the Channels palette and select which of the RGB has the greatest contrast. In this case, I selected the Green channel which gives the best result. Duplicate this channel by right-clicking it and select Duplicate Channel. A Duplicate Channel dialog box appears. Name the duplicate channel as Map, and under Document, select New.
Step 3 : The new image that appears as a result is a black and white. We will use this as our displacement map. Smooth this via the Gaussian Blur (Filter>Blur>Gaussian Blur…), and set the blur value to 0.7 pixel. Save this to your hard drive and name it Map.psd. Close this image for now.
Step 4 : Switch back to Channels. Click RGB to activate it. Now go to Layers tab and then select the Type Tool.
Step 6 : Time to apply the displacement stuff. Go to Filter>Distort>Displace… A dialog box appears. Leave all the values to their default settings and click Ok. You will then be prompted to open a file. Open the file we saved earlier (e.g., Map.psd). The Displacement Map has been applied here and a wrinkled text comes into view!
Step 7 : Duplicate the above layer, set Mode to Overlay, and Opacity to 70. Merge all visible layers, then Save.