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In this video, Rashid explains the Zip Code Validation API. He mentions that most APIs for this service are premium and costly, but he found a free API that gives similar results. The free API can validate zip codes and provide state, country, and city information. It is open source and supports multiple countries. Rashid shares the website or API link and demonstrates how to integrate it easily. The free API is effective and provides the necessary information for validating zip codes.