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In this video tutorial, Rashid explains the Zip Code Validation API. Many premium APIs for this purpose come at a high cost, but he found a free one that works well. This free API provides the same results as premium ones, including validation of zip codes and information on state, country, and city. It is open source and supports multiple countries, making it easy to integrate. The API returns postal code, country, United States abbreviation, and other necessary information for zip code validation.