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In this video, Rashid explains the zip code validation API. He mentions that many API parts are premium and costly, but he found a free API that works well. This free API can validate zip codes and provide information such as state, country, and city. Premium APIs give similar results but at a cost. The free API is open source, supports multiple countries, and is easy to integrate. Rashid provides an example of how to use the API to validate zip codes and obtain necessary information.