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In this video, Rashid explains the zip code validation API. Many premium APIs are costly, but after much effort, he found a free API that works well. This free API provides the same results as premium ones, validating zip codes and providing state, country, and city information. The API is open source and supports multiple countries, making it easy to integrate. The response includes postal code, country, state, and abbreviation. Free API is a reliable option for validating zip codes.