It seems unlikely that they'll be able to transfer money for free indefinitely. Their competitors hold on to balances for a reason: it's the only way to build a sustainable business on top of free money transfers.
Square Cash uses the refund rails, no? And aren't those actually free (albeit an exploit of the transfer system)?
Square Cash recently introduced the ability to send money w/ your credit card (before it was just debit). Square takes 3% of those transactions. Also, I think they charge 1.9% for non-personal use when sending money w/ a debit card.
The product and IPO price have literally zero correlation.