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In this video tutorial, Rashid explains the zip code validation API. He discusses how premium APIs can be costly, but 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. It is open source, supports multiple countries, and is simple to integrate. Rashid provides an example of how to use the API to get postal code, country, state abbreviation, and other necessary information.