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In this video tutorial, Rashid explains zip code validation API, highlighting that most APIs are premium with high costs. After much research, he found a free API that works well, providing zip code validation, state, country, and city information. Premium APIs give similar results, but the free one is efficient. The free API is open source, supports multiple countries, and is easy to integrate. It provides postal code, country, state abbreviation, and other necessary information for validating zip codes.