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In this video tutorial, Rashid explains the zip code validation API. He mentions that most APIs for zip code validation are premium, but he found a free one that works well. The free API provides information about the state, country, and city when a zip code is validated. Rashid demonstrates how to use the API and mentions that it supports multiple countries. The free API gives similar results to premium ones, making it a useful and cost-effective option for zip code validation.