B737-800 pilot reported a lithium battery fire occurred at the gate due to vape batteries in the passenger's carry-on and suggested that vape batteries be banned from all checked and carry-on luggage.

Narrative

While waiting to scan our crew badges at the gate; a passenger sitting in the XX gate holding area experienced a lithium battery fire in their carry-on baggage. The passenger was charging a vape pin battery and upon removing the battery charger; an explosion occurred that ignited the battery as well as two other vape batteries located in the same carry-on luggage. The FO and #1 FA retrieved a fire extinguisher located in the gate area and approached the burning luggage. #1 FA discharged the extinguisher and suppressed the fire. Passengers were noted running upstairs towards the ZZZ transportation platform to get away from the smoke and chemical agent of the extinguisher. The gate was secured and all remaining passengers were instructed to leave the area due to the existence of the smoke and extinguisher chemicals. I contacted Operations as well as the Flight Dispatcher to advise them of the incident. Flight Attendant managers arrived shortly after to attend to all FAs to assess fitness for duty. The on-call Chief Pilot contacted me to make sure we were ok as well. The aircraft was towed to Gate XY; and passengers were directed to relocate to the same gate. The flight left 1:06 hours later.Vaping batteries should be banned from all checked and carry-on luggage. Most of these batteries are of low quality and easily purchased at gas stations and represent a huge fire risk inflight.