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In this video tutorial, Rashid explains the zip code validation API. He mentions that many premium APIs are costly, but he found a free API that works well. The free API provides zip code validation and also gives information about the state, country, and city. Rashid compares the results of the premium API with the free API and states that they are almost the same. The free API is open source and supports multiple countries, making it easy to integrate. Overall, the free API is efficient in providing the necessary information for zip code validation.